Inflation rose instead of falling in the UK in February, and the chances of raising interest rates increased significantly.

(Reuters)

[Financial Channel/Comprehensive Report] Official data showed on Wednesday (22nd) that the inflation rate in the UK unexpectedly rose to 10.4% in February, driven by increases in food prices, bars and beverage prices.

Economists polled by Reuters had forecast that the U.K. consumer price index (CPI) would fall to 9.9% in February from 10.1% in January.

Grant Fitzner, chief economist at the ONS, said: "High energy costs and bad weather in parts of Europe have driven up prices for salads, vegetables and food and non-alcoholic drinks to their highest level in 45 years".

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Headline inflation for food and nonalcoholic beverages rose to 18.0 percent in February, the highest rate since 1977.

Core CPI, which excludes energy, food, alcohol and tobacco, also rose to 6.2 percent from 5.8 percent in January and had previously forecast a decline to 5.7 percent.

Given the recent turmoil in the global banking sector, the market is divided on whether to pause interest rate hikes in the UK.

"Given recent market moves, the BoE is in a difficult position, and that may not be enough to give the UK a pause in rate hikes," said Richard Carter, head of fixed-rate research at Quilter Cheviot.

Interest rate futures (Interest rate futures) point to a 100% chance of a rate hike in the UK of at least 1 yard.

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