Inflation Rises to 4.4%

Inflation, as measured by the Consumer Price Index (CPI), has risen to 4.4%, significantly more than the 4% reported for January.

The cost of living jumped significantly in February as higher fuel, food and clothing costs forced the CPI upwards by 0.4% compared to January.

The CPI figures exclude mortgage interest costs, but when these are factored into the Retail Prices Index this shows an annual inflation rate at 5.5% – the highest rate for twenty years.

These figures, which were higher than economists had expected, will cause concern to the Bank of England as the CPI figure has far exceeded the target of 2% for well over a year.

In an attempt to control inflation, the BoE will come under more pressure to increase interest rates, particularly as the costs of oil and other commodities remain high and look set to increase further.

With oil priced above $100 per barrel and no end in sight to the unrest in the Middle East the prices we pay at the forecourt, for heating our homes, as well as transporting almost everything we buy, will continue to exert upwards pressure on inflation.

CPI inflation figures are very likely to hit 5% in the next few months making a rise in base rates more likely from August onwards.