Latest UK inflation higher than expected – World
A woman looks to buy fruit and vegetables from a stall at Lewisham Market in south-east London, Britain on March 9, 2023. [Photo/Agencies]
The UK economy continued to deteriorate as the latest official figures on Wednesday showed inflation had risen to 10.4 percent. Experts had expected 9.9 percent.
The higher-than-expected rate of consumer price inflation for February fueled expectations that the country’s central bank – the Bank of England – will hike rates again on Thursday, likely by 0.25 percentage point.
The Bank of England has hiked interest rates 10 times since December 2021 to make borrowing more expensive and encourage less spending, more saving and lower inflation.
The Office for National Statistics (ONS), the UK’s independent statistics agency, said the inflation rate had been higher than expected, largely because of rising alcohol costs in pubs and restaurants in February, which had been sharply reduced while January inflation stood at 10, 1 percent.
Biggest hike in 45 years
The Financial Times newspaper quoted Grant Fitzner, the ONS’ chief economist, as saying that the cost of food and non-alcoholic beverages also rose rapidly by 18.2 percent in February, the fastest acceleration in 45 years.
Bad weather also led to higher energy consumption, which contributed to rising fuel prices.
And vegetable shortages, fueled by extraordinary weather and supply chain problems, have also pushed inflation higher.
The ONS said core inflation, which excludes common, volatile items such as alcohol, energy, groceries and tobacco, rose sharply to 6.2 percent from 5.8 percent in January. Economists polled by Reuters news agency said they had expected 5.7 percent.
Rachel Reeves, business spokeswoman for the Labor Party, Britain’s main opposition party, said the ruling Conservative Party had proved after 13 years in power that it was unable to run the economy successfully.
“The cost of living crisis is still tough and taxes are rising, but the government has decided to use the budget to give the top 1 per cent £1 billion ($1.23 billion),” she said. referring to tax cuts recently made by the government, particularly in relation to high earners’ pensions.
The UK now has an inflation rate that is five times the Bank of England’s target of 2 percent and higher than the rate in any other G7 country.
But the UK Treasury Secretary, Chancellor of the Exchequer Jeremy Hunt, insisted his policies would ultimately prevail.
“Falling inflation is not inevitable, so we must stick to our plan to halve it this year,” he was quoted as saying by the BBC.