Britain’s inflation rate unexpectedly rose in February, increasing pressure on the Bank of England to raise interest rates during its upcoming meeting. The consumer price index (CPI) jumped to 10.4% in the 12 months through February, up from 10.1% the previous month, as high energy prices continued to squeeze household budgets, according to the Office for National Statistics.
This is the first time in four months that the inflation rate has increased, and it is more than five times higher than the Bank of England’s target of 2%. While economists predict that prices will drop rapidly later in the year, the Bank of England will need to weigh the need to control inflation against concerns about the fallout from global banking troubles.
The bank has approved 10 consecutive rate increases since December 2021, pushing its key bank rate to 4%. Michael Hewson, chief analyst at CMC Markets UK, anticipates that the Bank of England will raise rates by at least a quarter of a percentage point.
Hewson said in a note to clients before the inflation figures were released, “A base rate of 4% barely seems adequate to act as a drag on this measure of price rises and will still increase the pressure on the Bank of England to raise rates on Thursday.”
The central bank’s decision to raise interest rates will have a significant impact on the economy and households across the country. While it may help to control inflation, it could also make borrowing more expensive and reduce consumer spending, potentially leading to slower economic growth.
The Bank of England’s meeting is set to take place on Thursday, and all eyes will be on its decision regarding interest rates. With inflation on the rise and concerns about global banking troubles, the central bank will need to carefully consider its options before making any decisions that could have a significant impact on the UK economy.