UK inflation on the Consumer Prices Index (CPI) measure stood at 10.4% in February 2023, according to data released by the Office for National Statistics (ONS) this morning. Inflation therefore increased from 10.1% in January, marking a divergence in the recent trend of deceleration seen in the prior three months. Consequently, February’s headline reading for annual inflation was higher than both Cebr’s own expectations of 10.0% and consensus expectations of 9.8%. On a monthly basis, the CPI rose by 1.1% in February. Meanwhile, the CPIH (Consumer Prices Index including owner occupiers’ housing costs) measure of inflation also rose, up from 8.8% in January to stand at 9.2% in February.
The main drivers of the unexpected uptick in inflation in February were price increases in the food and non-alcoholic beverages, restaurants and hotels, and clothing and footwear categories. The largest single impact on the increase in CPI inflation seen last month was due to price rises in restaurants and hotels, which rose from 10.8% in January to 12.1% in February this year. Meanwhile, prices within the food and non-alcoholic beverages category rose by 18.0% in the twelve months to February, up on January’s 16.7%, with the rate the highest observed for over 45 years. This will be most troubling for those households on the lowest end of the income spectrum as food costs make up a larger share of total expenditure. Notably, the largest upward impact within this group was due to the price of vegetables, which can be attributed to the recent shortages of produce at supermarkets due to erratic weather in key export countries among other factors.
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