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UK inflation unexpectedly rises in Feb

BRITISH consumer price inflation rose unexpectedly to 3.2 percent in February, official data showed today, forcing Bank of England Governor Mervyn King to write a letter explaining why it remains so far above the 2 percent target.

The Office for National Statistics said retail price inflation eased less than expected to stand flat on the year.

That was the weakest reading since 1960, but confounded expectations the measure would fall into negative territory.

Analysts had expected the headline CPI figure to ease to 2.6 percent from 3.0 percent in January.

February's unexpectedly strong figure means that King will have to explain to finance minister Alistair Darling why inflation remains strong and what action the central bank will take.

However, policymakers may view the pick-up in prices as temporary at a time when the economy is slowing sharply.

Indeed some analysts expect consumer price inflation to fall into negative territory later this year as the downturn continues and last year's energy price hikes fall out the statistics.

The ONS said the biggest upward impact on inflation came from food and soft drinks, with the prices of vegetables showing particularly strong rises.

Transport prices also rose by more than a year ago, reflecting a rise in the price of petrol of 3.2 pence per litre between January and February, the ONS said.

Lower interest rates and housing costs, however, helped to push down retail price inflation to zero.


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