Surge in energy costs propels UK prices to fastest pace in 9 months
Source: Bloomberg News |
March 20, 2013, Wednesday
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Print Edition
Print Edition
UK inflation accelerated to the fastest pace in nine months in February and factory-gate prices increased twice as much as forecast as energy costs surged.
Consumer prices rose 2.8 percent from a year earlier, compared with 2.7 percent in January, the Office for National Statistics said in London yesterday. That matched the median of 35 estimates in a Bloomberg News survey. Producer prices gained 0.8 percent from January, the most since April 2011.
Higher energy bills and a weaker pound have fueled price pressures in recent months. That's adding to the squeeze on consumers as they brace for another austerity budget by Chancellor of the Exchequer George Osborne today. With price gains above the Bank of England's 2-percent target, Osborne may also flag changes to the central bank's mandate to give policy makers more flexibility to stimulate growth.
"The economy is going nowhere fast and the BOE has said it will essentially look through above-target inflation," said Rob Wood, an economist at Berenberg Bank in London. "Whether of its own volition, or because the chancellor tweaks its inflation remit in the budget, we continue to expect the BOE to add more monetary stimulus this year."
Housing, water, electricity and gas added 0.11 percentage point to annual inflation in February - the biggest upward impact. That reflects increases in utility bills, the statistics office said.
Yesterday's report also showed that retail-price inflation, a measure used in wage talks, cooled to 3.2 percent in February from 3.3 percent in January. The retail-price index excluding mortgage-interest payments was at 3.2 percent.
The inflation data are the first since the statistics authority stripped RPI of its designation as a "National Statistic" after a review found it fell short of international best practice. Two new experimental indexes were introduced yesterday. A variant of the RPI, known as RPIJ, was at 2.6 percent in February. CPIH, which includes housing costs, was also at 2.6 percent.
The February data mark the 39th month that consumer-price inflation has been above the BOE target. Still, policy makers have said it's right to ''look through'' the current price surge to aid the economy.
With the BOE signaling openness to more stimulus, that's put pressure on the pound. Sterling has weakened against 14 of 16 major currencies tracked by Bloomberg News this year.
Governor Mervyn King said in a news interview last week that the BOE isn't trying to talk down the pound and it's now "broadly stable."
Consumer prices rose 2.8 percent from a year earlier, compared with 2.7 percent in January, the Office for National Statistics said in London yesterday. That matched the median of 35 estimates in a Bloomberg News survey. Producer prices gained 0.8 percent from January, the most since April 2011.
Higher energy bills and a weaker pound have fueled price pressures in recent months. That's adding to the squeeze on consumers as they brace for another austerity budget by Chancellor of the Exchequer George Osborne today. With price gains above the Bank of England's 2-percent target, Osborne may also flag changes to the central bank's mandate to give policy makers more flexibility to stimulate growth.
"The economy is going nowhere fast and the BOE has said it will essentially look through above-target inflation," said Rob Wood, an economist at Berenberg Bank in London. "Whether of its own volition, or because the chancellor tweaks its inflation remit in the budget, we continue to expect the BOE to add more monetary stimulus this year."
Housing, water, electricity and gas added 0.11 percentage point to annual inflation in February - the biggest upward impact. That reflects increases in utility bills, the statistics office said.
Yesterday's report also showed that retail-price inflation, a measure used in wage talks, cooled to 3.2 percent in February from 3.3 percent in January. The retail-price index excluding mortgage-interest payments was at 3.2 percent.
The inflation data are the first since the statistics authority stripped RPI of its designation as a "National Statistic" after a review found it fell short of international best practice. Two new experimental indexes were introduced yesterday. A variant of the RPI, known as RPIJ, was at 2.6 percent in February. CPIH, which includes housing costs, was also at 2.6 percent.
The February data mark the 39th month that consumer-price inflation has been above the BOE target. Still, policy makers have said it's right to ''look through'' the current price surge to aid the economy.
With the BOE signaling openness to more stimulus, that's put pressure on the pound. Sterling has weakened against 14 of 16 major currencies tracked by Bloomberg News this year.
Governor Mervyn King said in a news interview last week that the BOE isn't trying to talk down the pound and it's now "broadly stable."
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