British annual inflation jumped in February to the highest level in almost three and a half years, driven by increasing fuel costs, data showed Tuesday. The 12-month inflation rate hit 2.3 percent last month compared with 1.8 percent in January, the Office for National Statistics (ONS) said in a statement.
Analysts' consensus forecast had been for a pick-up to 2.1 percent. The February reading was the highest level since September 2013. The latest "inflation figures highlighted the more adverse impacts of the post-referendum drop in the pound," said Capital Economics analyst Paul Hollingsworth.
Sharp falls in sterling since Britain voted in June to quit the European Union has pushed up import costs and put pressure on the Bank of England to consider raising interest rates from record low levels. The possibility of the Bank of England (BoE) copying the Federal Reserve by hiking borrowing costs boosted the pound on Tuesday.
"The British pound is flying... after inflation data for February showed prices are rising much faster than thought," said Oanda senior market analyst Craig Erlam. "The spike in the inflation numbers probably explains why some BoE policymakers turned far more hawkish at the last meeting, with one voting for a rate hike and others suggesting they could soon follow."
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