UK inflation reached 6.2 percent in February, the highest in 30 years. The last time it ran hotter was March 1992, when it stood at 7.1 percent. The figure, published on March 23, added to the strain on British households.
No single item was to blame. Recreation and culture, along with clothing and footwear, produced the biggest increases in the consumer price index, and the Office for National Statistics said prices rose in 10 of the 12 categories that make up the index. Only communication and education did not climb.
“Inflation rose steeply in February as prices increased for a wide range of goods and services, for products as diverse as food to toys and games,” said the ONS chief economist, Grant Fitzner. Clothing and footwear had returned to traditional February price rises, he said, after last year’s falls when many shops were closed. Furniture and flooring added to the rise as prices recovered from the New Year sales.
Rates and the energy cap
The Bank of England raised its main rate from 0.5 percent to 0.75 percent last week, the third increase since mid-December. It wants to stop high inflation from becoming ingrained in the economy. The bank also warned that inflation would peak at around 8 percent in April, and could reach double digits if wholesale energy prices keep soaring.
April brings a 54 percent increase in the energy price cap set by the regulator Ofgem. A further rise is expected in October, possibly as much as another 50 percent, given what the war in Ukraine has done to gas prices.
Experts have warned that prices will go higher still as the conflict adds to painful rises for energy, fuel, commodities and food.
Samuel Tombs of Pantheon Macroeconomics said the Bank would probably lift rates to 1 percent in May to rein in inflation. He expects the economic recovery to slow sharply later this year as households feel the pinch.
