Office for National Statistics (ONS) figures show the UK Consumer Prices Index (CPI) annual rate of inflation has risen to 4.4%, up from 4% in January and more than double the Bank’s target of 2%.
The higher-than-expected increase comes just a day before George Osborne unveils his Budget and compares with a figure of 4.2% forecast by a 32-strong group of economists.
It is also likely to increase the pressure on the BoE’s Monetary Policy Meeting (MPC) to increase rates at its next meeting.
The RPI inflation index jumped to 5.5%, up from 5.1% in January. The ONS said the main factors impacting CPI – rising domestic heating costs and an increase in financial services costs – also impacted the RPI.
Publication of the inflation figures follows a sobering report by the Institute of Fiscal Studies (IFS) showing households are suffering their biggest drop in living standards for thirty years.
The increased inflation figures underscore the fragility of the economy as it struggles to emerge from recession just a day before Chancellor George Osborne is set to unveil a Budget designed to kick-start the economy, dubbed a Budget for growth.
