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UK inflation rate rises to 4.4% in February

2011-03-22 10:50:21

Fruit stall The CPI measure has now been one percentage point or more above

target for 15 months

The UK Consumer Prices Index (CPI) annual rate of inflation has risen to 4.4%,

up from 4% in January.

This was driven by higher food, fuel and clothing costs and was the highest

level for more than two years.

Retail Prices Index (RPI) inflation - which includes mortgage interest payments

- rose to 5.5% from 5.1% in January, the highest rate for 20 years.

The CPI measure has now been one percentage point or more above the 2% target

for 15 months.

The CPI figure is the highest since October 2008, and will put pressure on the

Bank of England to lift interest rates to curb accelerating inflation.

The main contributing factors included rising domestic heating costs, an

increase in financial services costs as well as the higher cost of books and

toys.

The largest inflationary pressures came from clothing and footwear costs which

rose by 3.6% following the January sales, compared with a rise of 2% in the

same period a year ago.

The overall increase in CPI to 4.4% was more than had been forecast by

economists.

"Inflation has jumped to its highest since October 2008, putting the Bank of

England under even greater pressure to demonstrate its commitment to hitting

its inflation target by hiking interest rates," said analyst Hetal Mehta of

Daiwa Capital Markets.

"And this pressure will no doubt intensify as higher commodity prices feed

through in the coming months, taking inflation to around 5%.

"Provided that interest rates start to increase by 25 basis points [0.25%] per

quarter from August, in line with our expectations, then we believe inflation

will average 2% next year," she added.