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UK inflation hits new 30-year high

UK inflation hit a new 30-year high in February as the cost of living crisis intensified, according to data released on Wednesday by the Office for National Statistics.
In the 12 months to February, consumer prices rose by 6.2% amid surging energy and fuel costs, up from 5.5% in January and marking the highest inflation reading since March 1992, when inflation was 7.1%. Analysts had been expecting 6%.

On a month-on-month basis, prices were up 0.8%, which was the biggest monthly CPI jump between January and February since 2009.

Meanwhile, the retail price index came in at 31-year high of 8.2%.

Grant Fitzner, chief economist at the ONS, said: “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.

“Clothing and footwear saw a return to traditional February price rises after last year’s falls when many shops were closed.

“Furniture and flooring also contributed to the rise in inflation as prices started to recover following new year sales.

“The price of goods leaving UK factories has also been rising substantially and is now at its highest rate for 14 years.”

The latest inflation reading comes ahead of Chancellor Rishi Sunak’s Spring Statement, in which he is expected to cut fuel duty by 5p per litre and raise the threshold for national insurance.

Paul Dales, chief UK economist at Capital Economics, said: “Overall, we think CPI inflation will peak around 8.3% in April (if not a bit higher) and will stay above 6.0% for all of this year and above 3.0% for most of next year.

“With inflation now over three times the Bank of England’s 2% target and soon to be over four times the target, today’s data release adds to the pressure on the Bank to keep raising interest rates. We think rates will rise from 0.75% now to 2.00% next year.”

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