# UK inflation rate unexpectedly rises to 10.4% in February Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2023-03-22 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: UK Inflation Rises to 10.4% in February Meta Description: Stay updated on the latest economic news as British inflation unexpectedly rises to 10.4% in February. Will the Bank of England raise interest rates again? URL: https://financedigest.com/uk-inflation-rate-unexpectedly-rises-to-10-4-in-februaryhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2023-03-22t071412z2lynxmpej2l06lrtroptp4britain-economy-recession-1736814281852-compressed.jpg) By William Schomberg and David Milliken LONDON (Reuters) – British inflation unexpectedly rose to 10.4% in February, pushed up by higher food prices and pricier drinks in pubs and restaurants, official data showed on Wednesday, a day before the Bank of England announces its latest interest rate decision. Economists polled by Reuters had forecast that the annual CPI rate would drop to 9.9% in February from January’s 10.1% and move further away from October’s 41-year high of 11.1%. The [BoE is due to announce on Thursday whether it has raised interest rates](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") for an 11th meeting in a row. [Investors are split on whether it will pause its run of increases in borrowing costs because of the recent upheaval in the global banking](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") sector. Given the market movements of late, this puts the Bank of [England](https://www.financedigest.com/bank-of-england-fines-former-tsb-executive-over-2018-it-failure.html "Bank of England fines former TSB executive over 2018 IT failure") in an incredibly difficult position as it may not be enough for the Bank of England to press pause on the rate hikes,” Richard Carter, head of fixed interest research at Quilter Cheviot, said. Sterling rose against the [dollar and the euro after the data](https://www.financedigest.com/dollar-dips-ahead-of-inflation-data-later-this-week.html "Dollar dips ahead of inflation data later this week") was published. Interest rate [futures](https://www.financedigest.com/bank-of-england-officials-split-over-future-path-for-rates.html "Bank of England officials split over future path for rates") showed a 100% chance that the BoE would raise rates by at least a quarter point, up from just over 50% late on Tuesday. The ONS said that an [end to January drinks promotions in pubs and restaurants was the biggest factor pushing up inflation](https://www.financedigest.com/european-shares-rise-as-us-inflation-data-signals-end-of-rate-hike-cycle.html "European shares rise as US inflation data signals end of rate-hike cycle") last month, but shortages of salad items also played a role. Food and non-alcoholic drink prices rose to their highest rate in over 45 [years with particular increases for some salad and vegetable items as high energy costs](https://www.financedigest.com/commonenergy-mistakes-costing-homeowners-hundreds-of-pounds-each-year.html "Commonenergy mistakes costing homeowners hundreds of pounds each year") and bad weather across parts of Europe led to shortages and rationing,” ONS chief economist Grant Fitzner said. Higher alcoholic drink prices added 0.17 percentage points to the annual [rate of inflation](https://www.financedigest.com/hotel-investors-should-they-be-worried-about-a-potential-economic-pause-delving-into-inflation-interest-rates-recession-etc.html "‘Hotel Investors – should they be worried about a potential economic pause?’ delving into inflation, interest rates, recession etc") in February, while the increased cost of food and non-alcoholic beverages added 0.15 percentage points. Overall [inflation for food](https://www.financedigest.com/average-annual-uk-food-bill-set-to-rise-454-pounds-as-inflation-soars.html "Average annual UK food bill set to rise 454 pounds as inflation soars") and non-alcoholic drinks rose to 18.0%, its highest since 1977. UNDERLYING INFLATION UP, TOO Core [CPI – which excludes energy](https://www.financedigest.com/italy-cpi-rises-again-in-april-amid-energy-prices-volatility.html "Italy CPI rises again in April amid energy prices volatility"), food, alcohol and tobacco and is watched closed by the BoE – rose to 6.2% from 5.8% in January, versus a forecast decline to 5.7%. The annual inflation rate in the services sector, which most policymakers consider is a good measure of underlying [price pressures](https://www.financedigest.com/oil-prices-dip-on-u-s-crude-reserve-release-inflation-pressure.html "Oil prices dip on U.S. crude reserve release, inflation pressure") in the economy, rose to 6.6% after standing at 6.0% in January. The increase in [inflation in Britain contrasted with a fall](https://www.financedigest.com/boes-mann-falling-headline-inflation-high-core-make-policy-difficult.html "BoE’s Mann: Falling headline inflation, high core, make policy difficult") in the U.S. CPI rate to 6.0% in the 12 months to February. [Euro zone inflation](https://www.financedigest.com/euro-zone-consumers-more-optimistic-on-inflation-ecb-survey-shows.html "Euro zone consumers more optimistic on inflation, ECB survey shows") also eased last month but underlying price growth continued to accelerate. [Finance minister Jeremy Hunt said the data showed the expected decline in inflation](https://www.financedigest.com/how-finance-leaders-can-turn-the-inflation-challenge-into-opportunity.html "How finance leaders can turn the inflation challenge into opportunity") could not be taken for granted. Falling inflation isn’t inevitable, so we need to stick to our [plan to halve it this year,”](https://www.financedigest.com/3-factors-to-plan-for-in-2017-a-year-like-none-other.html "3 Factors to Plan for in 2017, A Year Like None Other") Hunt said in a statement. On Tuesday, he told lawmakers that [inflation above 10%](https://www.financedigest.com/boe-flags-risk-of-recession-and-10-inflation-as-it-raises-rates-again.html "BoE flags risk of recession and 10% inflation as it raises rates again") was “dangerously high. There were some signs of decreasing [price pressures](https://www.financedigest.com/heavy-norwegian-gas-maintenance-adds-to-energy-price-pressure.html "Heavy Norwegian gas maintenance adds to energy price pressure") ahead. Prices paid by [factories increased by 12.7% over the 12 months](https://www.financedigest.com/japans-factory-output-posts-biggest-fall-in-8-months-on-weak-autos-chips-sectors.html "Japan’s factory output posts biggest fall in 8 months on weak autos, chips sectors") to February, still a big rise by historical standards but their weakest increase since September 2021. [Prices charged by manufacturers rose at their weakest pace in a year](https://www.financedigest.com/hong-kong-home-prices-drop-15-6-in-2022-snap-13-years-of-gain.html "Hong Kong home prices drop 15.6% in 2022, snap 13 years of gain"), up by 12.1%. (Reporting by David Milliken and William Schomberg, editing by William James and Bernadette Baum) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---