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Inflation in the UK unexpectedly rose last month as vegetable shortages pushed food prices to their highest level in more than 45 years, official figures show.
The latest data from the Office for National Statistics (ONS) show that the Consumer Price Index (CPI) rose by 10.4% in the 12 months to February 2023. 2022.
Most economists expected the CPI to fall to 9.9% in February, so the rise in inflation comes as a surprise.
On a month-to-month basis, the CPI rose 1.1% in February, compared to a 0.8% increase in the same month last year.
ONS Chief Economist Grant Fitzner said:
“Prices for food and non-alcoholic beverages have risen to their highest levels in more than 45 years, and some salads and vegetables have risen particularly as high energy costs and bad weather in parts of Europe have led to shortages and rationing.
“These were partially offset by lower motor fuel costs, which eased annual inflation for the seventh straight month.”
The data is a headache for the UK’s central bank, the Bank of England, and ahead of Thursday’s interest rate decision, policymakers are already facing a dilemma given recent financial market turmoil and fears of a banking crisis. I’m here.
Some experts expect banks to refrain from further rate hikes citing market volatility, but the latest inflation data is likely to complicate the decision.
soaring food prices
Prices for food and non-alcoholic beverages rose 18.2% in the year to February, up from 16.8% in January and the highest since August 1977, according to the ONS.
Vegetables were the biggest driver of food prices. The UK is suffering from shortages of salad products and other vegetables, reportedly due to bad weather in southern Europe and North Africa and the impact of higher electricity prices on greenhouse-grown produce in the UK and northern Europe out of season. is.
These price fluctuations have resulted in an annual rate of 18.0% for vegetables in the year to February 2023, the highest since February 2009.
Annual rates for bread and cereals, chocolate and confectionery, prepared foods and sauces, and hot beverages were the highest in February since at least 2008, according to the ONS.
The latest data show that higher drink prices in pubs and restaurants have also pushed up inflation after January’s discounts as the hospitality sector tries to offset very high energy and labor costs. .
Inflation across restaurants and cafes rose to 11.4% last month from 9.4% in January, the highest since December 1991.
“Omnicham Bulls”
Commenting on the latest inflation rate, Treasury Secretary Jeremy Hunt said: “We need to stick to our plan to halve this year because a fall in inflation is inevitable.”
He added: “We are aware of how difficult the situation is for families across the country. So as we work to keep inflation under control, we are averaging 3,300 per household this year. We will support the family with living expenses assistance worth £1.
Opposition parties blamed the Conservative government for rising inflation.
Labour’s shadow prime minister, Rachel Reeves, said: “The reality is that families are feeling worse under this Conservative government and nothing is working better than it did 13 years ago.” said.
Liberal Democrat Treasury spokeswoman Sarah Olney said the rise “further proves why the prime minister should have cut the energy bill in the budget.”
“The Conservative Party’s record on the cost of living crisis is nothing short of a disaster. People don’t have to pay for this government’s economic omnish bull,” she said.
“Stubborn Peak”
February’s rise suggests the pressure on UK households and businesses’ cost of living is far from over.
However, economists still believe inflation will begin to ease again this year.
The UK’s financial watchdog, the Office for Budget Responsibility, cut its inflation forecast last week, predicting CPI to end the year at around 2.9%.
“Inflation picked up in February, but the outlook for the next few months looks more benign,” said Arpesh Pareja, chief economist at the Confederation of British Industry.
However, he added, “Despite further declines in the coming months, this year will remain a high inflation environment for both households and businesses.”
David Barrier, head of research at the British Chamber of Commerce, said the unexpected rise in inflation showed “the UK economy is still in the midst of a stubborn peak”.
“The longer this goes on, the greater the impact on businesses and consumers as higher prices become the norm,” he added.
PA Media contributed to this report.
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