Britain’s underlying inflation rate unexpectedly leapt back above the Bank of England's 2.5 per cent target last month for the first time since last August, official data has shown.
The Office for National Statistics said today RPIX, which excludes volatile home loan payments, rose to 2.6 per cent in January from 1.9 per cent in December, only the second above-target number since April 1999.
That was significantly higher than the average forecast from economists of 2.2 per cent and may raise renewed concerns about inflation and interest rates in Britain, although most pundits think the jump will prove to be a blip.
The Bank of England cut interest rates seven times last year to a 38-year low of 4 per cent in a bid to head off recession and as RPIX remained comfortably below target. The latest rise is therefore bound to boost the belief in the City that the next move in rates will be up, although not for some months.
Upward effects came from fuel and light prices, due to price rises for gas. Discounting in clothing and footwear was also less severe than a year earlier.
Leisure services also contributed a large boost to inflation as increased costs of TV licences and rentals were partially offset by changing costs of entertainment and leisure services, which fell in contrast to a year earlier.