Driven by higher food and electricity prices, the UK inflation (Consumer Price Index) unexpectedly jumped last month.
A report released on Wednesday showed a 10.4% year-over-year rise in the Consumer Price Index, exceeding economists' consensus forecast of 9.9% and up from 10.1% in January. CPI month-over-month hit 1.1%, beating the forecast of 0.6%.
According to economists, the rise in the prices of food products, wearing apparel, and restaurant and cafe bills are what boosted the CPI growth. Lower prices for a number of leisure and entertainment goods somewhat offset the effect of this.
At the same time, we are witnessing an increase in the CPIH index, which includes the owner-occupiers' housing costs (OOH). Last month it hit 9.2% year-over-year, up from 8.8% in January.
After slowing for three consecutive months, the unexpected acceleration of UK inflation happened since the 41-year high of 11.1% observed in October.
British households continue to struggle with high food and energy bills. In the meantime, workers employed in several sectors have joined the mass strikes in recent months due to disputes over wages and labor conditions.
Escalation of inflation makes matters worse for the Bank of England, as it continues to hike the interest rates aggressively in an attempt to keep the rising prices at bay. The Bank of England’s meeting will be held on Thursday, with the expected increase in the interest rates.
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