UK inflation hits 30-year high of 6.2% as Sunak readies response

Soaring prices of energy, petrol, food add to strain

British inflation shot up faster than expected last month to hit a new 30-year high, worsening a historic squeeze on household finances that finance minister Rishi Sunak is under pressure to ease in a budget update later on Wednesday. The Office for National Statistics said consumer prices rose by 6.2 per cent in February after a 5.5 per cent rise in January, its highest rate since March 1992. The median forecast in a Reuters poll of economists had pointed to a reading of 5.9 per cent and only three of the 39 respondents had expected such a strong reading.

The ONS highlighted household energy bills - up almost 25 per cent on a year ago - and petrol as the biggest drivers of February’s price jump. In a blow to poorer households, the ONS said food prices were rising across the board, unlike in normal times when some prices typically go up and others fall.

Mr Sunak will aim to show later today that he is helping Britons through the worst cost-of-living squeeze in decades. Yael Selfin, chief economist at KPMG UK, said the figures added pressure on the Bank of England to keep on raising interest rates, but she said it was still likely that price growth would peak before long. "Provided inflation expectations can be managed and global commodity prices stabilise by next year, we should see inflation returning to the Bank of England's 2 per cent target by mid-2024," Mr Selfin said. "This may require fewer rate rises than markets currently anticipate." The ONS said consumer prices rose by 0.8 per cent in month-on-month terms, marking the biggest February rise since 2009. Last week, the BoE raised its forecast for inflation to peak above 8 per cent - more than four times its target - during the April-June period. Regulated household energy bills are due to jump by more than half next month. Inflation pressure ahead continued to build as manufacturers increased their prices by 10.1 per cent, the biggest annual rise since September 2008 although it was in line with the median Reuters poll forecast. - Reuters