United Kingdom: Inflation rises to highest level in over two years
March 22, 2011
Inflation has reached levels not seen since 2008, adding pressure on the Bank of England to take action. In February, consumer prices added 0.7% over the previous month, which came in above the 0.1% price increase tallied in January. As a result of the pronounced price increase in February, annual inflation jumped from 4.0% in January to 4.4%, which exceeded market expectations of inflation increasing to 4.2% and represented the highest rate since October 2008. The most important factor driving the monthly price increase was higher prices for clothing and footwear (+3.6% month-on-month), following the end of the January sales. However, higher prices for food and oil also contributed to the monthly price hike. In its latest inflation report, the Bank of England raised its inflation expectations from 2.8% in the November publication to 4.3%.