British inflation rose to its highest level for more than two years today, heaping further pressure on the Bank of England to raise interest rates.
The consumer price index rate of inflation rose to 4.4% in February from 4% in January, driven by increases in the price of fuel, food and clothing, said the Office for National Statistics. Economists had expected a rise of 4.3%.
Today's figure, the highest rate since October 2008, is now more than double the Bank of England's 2% target, and is likely to throw weight behind the argument for hiking interest rates from a historic low of 0.5%.
The retail prices index measure of inflation, which includes mortgage payments, rose to 5.5% from 5.1% in January, its highest level for 20 years, and also ahead of expectations of 5.3%.
Stubbornly high inflation in recent months in the UK has prompted calls for a hike in the interest rate, which last month was held for the 24th month in a row. But weaker than expected economic growth figures revealing a shock 0.6% decline in GDP in the final quarter of 2010 dampened this prospect.
The number of policymakers at the Bank who voted in favour of an interest rate rise increased last month but the majority of the Monetary Policy Committee wanted to wait to see how the economy has fared in the first quarter of this year before taking any action.
Petrol and diesel prices hit new records of £1.29 sterling a litre and £1.34 a litre respectively in February, driven by a rise in oil prices made worse by the recent uprisings in the Middle East and North Africa, the ONS said.
Transport bills, which were up 0.8% since January, were the biggest single factor pushing up CPI, the ONS added. Utility bills were up 3.1% on the previous year after showing their biggest surge since 2009.
The price of clothing and footwear rose 3.6% in February, a record monthly increase, as retailers brought in bigger than normal hikes following the January sales. But there was some downward pressure on inflation, as alcohol and tobacco became cheaper.
The core rate of CPI, which strips out volatile elements such as oil and food, hit 3.4% - its highest level since records began in 1997.
Surprise as UK public borrowing rises
British Chancellor George Osborne was dealt an unexpected pre-Budget blow today as government borrowing last month came in higher than City expectations.
Public sector net borrowing for February, excluding financial interventions such as bank bailouts, was £11.8 billion sterling, compared to £9.5 billion a year earlier, the Office for National Statistics (ONS) said.
This was nearly double the £6.9 billion forecast by economists and a record for the month of February.
Borrowing for the year to date now stands at £123.5 billion after the Government recorded its weakest tax haul since January last year.
The worse-than-expected performance will cast doubt on hopes that the Government is on course to beat its £148.5 billion target for the financial year.
