Consumer price inflation in Britain rose unexpectedly to 3.2 per cent year-on-year last month, official data showed today, forcing Bank of England Governor Mervyn King to write a letter explaining why it remains so far above the 2 per cent target.
The Office for National Statistics (ONS) also said retail price inflation, another measure of prices, eased less than expected to stand flat on the year. That was the weakest reading since 1960, but confounded expectations that it would fall into negative territory.
Analysts had expected the headline CPI figure to ease to 2.6 per cent from 3 per cent in January.
In a letter to chancellor Alistair Darling explaining why inflation remains strong, Mr King said the figure could reflect the transmission of weak sterling to consumer prices.
However, he said that the central bank believed the sharp decline in CPI inflation was likely to resume in the next few months when lower energy prices and slower demand growth feed through.
Some analysts expect consumer price inflation to fall into negative territory later this year as the downturn continues and last year's energy price increases fall out of the statistics.
The ONS said the biggest upward impact on inflation came from food and soft drinks, with the prices of vegetables showing particularly strong rises.
Transport prices also rose more than a year ago, reflecting an increase in the price of petrol of 3.2 pence per litre between January and February, the ONS said.
Lower interest rates and housing costs, however, helped to push down retail price inflation to zero.
Reuters