LONDON – British inflation rose in February for the first time in four months, catching analysts by surprise and increasing pressure on the Bank of England to raise interest rates at its meeting Thursday.
The consumer price index rose to 10.4% in the 12 months to February, up from 10.1% the previous month, as energy prices continued to punish household budgets, the Office for National Statistics said Wednesday.
Although economists expect prices to fall rapidly this year, inflation is five times higher than the Bank of England’s 2% target.
The central bank will assess the need to control inflation, taking into account concerns about the effect of recent global banking problems, when it decides Thursday whether to raise interest rates. The bank has authorized 10 consecutive hikes since December 2021, bringing the benchmark bank rate to 4%.
Michael Hewson, chief analyst at CMC Markets UK, said he expected the Bank of England to raise interest rates by at least a quarter percentage point.
“A prime rate of 4% hardly seems adequate to act as a brake with this level of price rises, and they will continue to increase pressure on the Bank of England” to raise rates on Thursday, Hewson said in a note to clients sent before the inflation figures were released.