Food and fuel prices push inflation over Bank of England’s 2% target
- Credit: Sonya Duncan
Inflation hit its highest level in more than three years in February after food and fuel prices pushed it over the Bank of England's 2% target.
The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measure of inflation reached 2.3% last month, up from 1.8% in January.
The move – the first above-target rise since November 2013 – will put pressure on the bank's monetary policy committee to hike interest rates beyond 0.25% this year, despite its rejection of an increase to 0.5% last week.
It comes as the ONS switched to its preferred measure of inflation from CPI to the Consumer Prices Index including owner occupiers' housing costs (CPIH), which includes costs associated with living in, maintaining and owning a house. The CPIH measure also reached 2.3%, up from 1.9% in January.
ONS deputy national statistician Jonathan Athow said there had been price increases across a range of items, with food and fuel having
The price of food rose by 0.3% between last month and February 2016, after falling on the year for 31 consecutive months.
The supermarket price war had kept a lid on price rises, but food is now becoming more expensive as producers begin to pass down soaring import costs triggered by the pound's slump since the EU referendum result.
Overall food prices lifted 0.8% between January and February, in contrast to a smaller rise of 0.1% a year earlier, after shock weather conditions in southern Europe ravaged crops and left supermarkets and restaurants grappling with a vegetable shortage.
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A jump in transport costs was also driving inflation higher, with motor fuels rising 1.2% month on month in February.
The price of petrol lifted by 1.6p per litre at the pumps to 120.2p for February, while diesel increased by 123.2p per litre to 1.3p over the period.
Kristen Forbes, one of the nine rate-setters on the monetary policy committee, broke rank to vote for an interest rate hike to 0.5% last week amid fears that inflation is 'rising quickly and was likely to remain above target for at least three years'.
The Bank of England, which will continue to use CPI as its measure for setting interest rates, predicted inflation to lift to 2% in February, peaking at 2.8% in the first half of next year, before falling back to 2.4% in three years' time.