Inflation rises to 2.5%

by Gill Montia

Story link: Inflation rises to 2.5%

The Office for National Statistics has confirmed that inflation rose to 2.5% in February, a nine month high.

The Consumer Prices Index (CPI), the official measure of inflation, rose 0.3% during the month, up from 2.2% in January.

The ONS has pointed out that the rise was largely due to a change in the way it calculates inflation.

A new method has been adopted to allow the effect of price increases to register more quickly.

Had it remained the same, CPI inflation would have been unchanged in February, at 2.2%.

However, household bills have been rising steeply as gas and electricity suppliers increase their tariffs to reflect rises in wholesale energy costs.

On an annual basis, cheese, milk and bread prices rose by 17.6% last month, while the cost of fruit and vegetables fell slightly on the same time last year.

Petrol prices rose by 0.1p between January and February to an average 104p a litre, compared with a fall of 0.3p a year ago.

Petrol prices are expected to put upward pressure on inflation for much of this year, while changes made in last week’s Budget will also be having their impact on the CPI.

The Bank of England is charged with keeping inflation at 2% or below. The target is a critical factor in determining the timing and size of any cut in the base rate.