LONDON: Britain’s annual inflation rate rose more than expected last month, official data showed Wednesday, adding pressure to the Labour government which is also facing sluggish economic growth.
The Consumer Prices Index jumped to 3.0 percent in January, up from 2.5 percent in December, according to the Office for National Statistics (ONS).
The reading comes as a blow to the centre-left government, elected in July, as it tries to tackle the dual pressures of rising prices and slow economic growth.
“The rise was driven by air fares not falling as much as we usually see at this time of the year,” noted Grant Fitzner, chief ONS economist.
“After falling this time last year, the cost of food and non-alcoholic drinks increased, particularly meat, bread and cereals,” he added.
New taxes on private schools announced in the government’s maiden budget led to an increase in tuition fees at the beginning of the year which also contributed to rising prices.
The figure pushes inflation away from the Bank of England’s two percent target, but remains broadly in line with the central bank’s forecasts for the year, analysts said.
The BoE cut its key rate earlier in February for the third time in six months and cautioned that it would take a “gradual and careful” approach to reducing rates further.
This cautious approach was reinforced by figures the previous day showing an acceleration in UK wage growth.
“Getting more money in people’s pockets is my number one mission,” finance minister Rachel Reeves said in response to Wednesday’s figures.
“That’s why we’re going further and faster to deliver economic growth,” she added.
Comments
Comments are closed for this article.