ANNUAL UK consumer prices index inflation rose to a nine-month high of 2.8% in February, from 2.7% in January, according to official figures that highlight the squeeze on real household incomes.
Rises in household gas and electricity bills last month, which contrasted with falls in February 2012, drove the increase in annual CPI inflation. Increases in prices of games, toys and hobbies, notably computer games and photographic equipment, also put upward pressure on annual inflation last month, as did jumps in air fares and petrol and diesel prices.
A downward influence came from a smaller rise last month in prices in the food and non-alcoholic beverages category than in February 2012. This cut annual inflation in this category from 4.2% in January to 3.7% in February.
The rise in annual inflation, and the potential for a further increase, was not viewed by economists as preventing the Bank of England from providing further monetary stimulus for a UK economy in serious danger of recording its third recession since 2008.
There has been much speculation about whether or not Chancellor George Osborne will change the remit of the Bank's Monetary Policy Committee (MPC) in his Budget today.
Vicky Redwood, chief UK economist at consultancy Capital Economics, said: "Inflation is likely to pick up further in the near-term. However, the MPC has indicated it will 'look through' this rise and the chancellor may announce a change to its remit in (the) Budget that will make it easier for the committee to take a more flexible approach to its (2%) inflation target."
She added that the easing of annual food price inflation perhaps meant "supermarkets were struggling to pass on all of the recent rise in agricultural prices".
Howard Archer, chief UK economist at consultancy IHS Global Insight, said 2.8% inflation put "a significant squeeze on consumers' purchasing power" given annual earnings growth was half this rate at 1.4%.
Annual inflation on the old all-items retail prices index measure dipped from 3.3% in January to 3.2% in February.
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