Official figures today showed the Bank of England's (BoE) target rate of inflation rising unexpectedly in February.
The office of National Statistics said the annual CPI inflation rate rose to 2.8 per cent from 2.7 per cent in January. The increase may boost the chances of another interest rate increase in United Kingdom in the next couple of months.
February's increase was the second highest since December 1995. The only time it was higher in the intervening period was in December 2006, when it stood at 3 per cent, just shy of the rate that would trigger an explanatory letter from BoE governor Mervyn King to Chancellor of the Exchequer, Gordon Brown.
This means that the annual CPI rate has now been above the BoE's 2 per cent for ten months in a row and is likely to make it more likely that the rate-setting Monetary Policy Committee will lift borrowing costs some time in the next couple of months.
Further clues on the interest rate outlook will be revealed tomorrow in the minutes to the last meeting of the Bank of England's rate-setting Monetary Policy Committee, where the key repo rate was left unchanged at 5.25 per cent.
On a month-on-month basis, the figures showed that CPI rose by 0.4 per cent from January, against the previous month's 0.8 per cent decline. This was above analysts' expectations for a 0.3 per cent rise.
Agencies