Inflation in the UK increased by 10.4 percent in February, contrary to the 9.9 percent expectations, and remained double digits for the sixth month.
UK inflation was unexpectedly high, driven by the rise in restaurant and retail prices, and was in double digits for the sixth month.
According to data from the UK’s National Statistics Office, the consumer price index increased by 10.4 percent in February, after an annual increase of 10.1% in January. Annual inflation rose for the first time in four months. Economists had expected an annual CPI of 9.9 percent.
The latest data will likely disappoint the Bank of England, which expects a sharp decline in CPI towards its 2 percent target this year. The data can also solid arguments for the need for more rate hikes.
The Bank of England adopted more neutral verbal guidance after raising interest rates the most in 30 years. The bank’s Chairman, Andrew Bailey, said investors shouldn’t assume that more rate hikes are needed before the confidence crisis centered on Silicon Valley Bank and Credit Suisse hit the industry.
Inflation in the UK peaked at 11.1 percent in October. The fall in energy prices, which increased rapidly in 2022, strengthened the expectations for a sharp decline in inflation this year. BOE was expecting 9.7 percent CPI in the first quarter of this year.