For the past few months, the debate over inflation in Britain has centred around just how fast the rate might fall. Both the Bank of England and the Office for Budget Responsibility’s most recent forecasts have been very optimistic, showing inflation falling back down to something approaching the Bank’s target of 2 per cent by the end of the year. Despite a slow start to the year, and CPI (core price inflation) remaining in the double digits, virtually everyone has assumed the headline rate was on a one-way track, heading downwards.
This makes this morning’s update a surprise and a blow to the economic consensus, as the Office for National Statistics has reported that CPI rose on the year in February, up from 10.1 per cent to 10.4 percent.
The unexpected jump is largely due to increasing services costs – particularly for restaurants, cafes and pubs – as well as the cost of food and alcohol.
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