UK inflation unexpectedly jumps to 10.4%

The United Kingdom's (UK) consumer price index (CPI) rose to 10.4 percent in the 12 months to February 2023 from 10.1 percent in January, the Office for National Statistics (ONS) said on Wednesday, reported Xinhua.

The 10.4 percent rise was higher than the 9.9 percent forecast by economists polled by Reuters, dampening expectations for a marked drop in inflation. Inflation had been falling from the 41-year-high of 11.1 percent in October 2022 for three months.

Commenting on the CPI figures, ONS chief economist Grant Fitzner said that inflation was mainly driven by "rising alcohol prices in pubs and restaurants following discounting in January."

"Food and non-alcoholic drink prices rose to their highest level in over 45 years with particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing," he said.

The downward contributions came from the fall in motor fuel costs, where the annual inflation rate has eased for seven consecutive months, according to Fitzner.

The surprising rise has piled pressure on the Bank of England to lift interest rates again. The monetary policymakers will announce their decision on Thursday.

Kitty Ussher, chief economist at the Institute of Directors, said: "In recent days some have suggested that the febrile environment in the banking sector should give central banks pause for thought before raising rates further. Today's data suggests the opposite; the Bank of England's job is not yet done."

The central bank has been raising the interest rate since December 2021 to battle the surging inflation.