ANNUAL UK consumer prices index inflation surged to a 30-year high of 6.2 per cent in February, once again coming in higher than expected, official figures show.

The inflation rate is up from 5.5% in January, and exceeded the median forecast of 5.9% in a poll of economists by Reuters.

The Bank of England last week predicted that annual CPI inflation will rise to around 8% in the second quarter, with household energy bills due to surge from April 1 for customers on variable tariffs on the back of a 54% rise in the price cap by regulator Ofgem. And the Bank of England said last week that inflation could “perhaps” move “even higher later this year”.

Publishing the latest inflation figures today, the Office for National Statistics said: “Average petrol prices stood at 147.6 pence per litre in February 2022, compared with 120.2 pence per litre a year earlier. The February 2022 price is the highest recorded.”

Petrol prices have surged significantly higher since last month, following Russia’s invasion of Ukraine.

James Lynch, fixed income manager at Aegon Asset Management, highlighted the fact that much of the surge in energy prices had yet to feed through to the inflation figures.

He said: “This morning the ONS confirmed UK inflation rose by 6.2% in February on the CPI measure. This rise in prices is more of a reflection of the Covid reopening story.

“It was a broad-based increase in prices of everything from households good (9.3%), food (5%) to clothing (9%). This is about supply chain issues and increasing demand, along with what was actually a modest rise in energy prices. By mid-February wholesale Brent oil was $90 a barrel, up from around an average of $80 between October and Jan.

“Oil is now $115 a barrel and this latest move has not yet been reflected in official inflation measures, and along with the Ofgem rise in household energy bills it means unfortunately we are now only at the start of a very painful period for price rises in the UK which may well last all year and into 2023.”

And he highlighted the potential for further rises in UK base rates, which have been increased from a record low of 0.1% to 0.75% in recent months.

Mr Lynch said: “In terms of policy measures by the Bank of England, the latest communication from them is it is of course concerned what this ‘cost of living crisis’ does to consumer demand, and in turn economic growth. On the other hand it will be worried that this type of inflation is not going to be ignored by households and it could be a perfect storm for high inflation expectations to become embedded given the UK’s current robust labour market backdrop.

“If the labour market continues to be tight and we see wages rise then we expect the Bank of England to keep to its hiking path of 0.25 [percentage points] per meeting given the inflationary backdrop.”