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UK inflation surges to 4.4 per cent
Annual inflation reaches highest level for more than two years, propelled by higher food and fuel costs.
Last Modified: 22 Mar 2011 15:10
Higher clothing costs were among the reasons cited by the Office for National Statistics for the rise in inflation [EPA]

Britain's annual inflation rate jumped to 4.4 per cent in February, up from four per cent the previous month, and putting it at the highest level for more than two years.

Data from the Office for National Statistics (ONS) showed that the increase was propelled by soaring domestic gas and electricity bills, rising clothing costs and record fuel prices.

"Domestic heating costs and clothing are the most significant drivers behind the increase in annual inflation between January and February," the ONS said.

Tuesday's figure for the Consumer Price Index of inflation compared with market expectations for a year-on-year rise to 4.3 per cent, according to analysts polled by Dow Jones Newswires.

At 4.4 percent, the highest level since October 2008, the annual rate is now more than double the Bank of England's official target rate of two per cent.

Annual inflation in the UK has now risen for the past five months in a row, with surging world oil prices and a recent hike in government sales taxes helping to fuel the rise.

Retail price inflation, which includes mortgage payments and is used as a starting point for many wage negotiations, rose to 5.5 per cent from 5.1 per cent, its highest since July 1991.

Borrowing rise

The ONS also announced that public sector net borrowing (PSNB) totalled $16.7bn in February, up from $13.2bn for the same month in 2010 and well above economists' median forecasts of $13bn.

The government's preferred measure, PSNB excluding financial sector interventions, rose to $19.2bn.

Both measures were the highest for a month of February since records began in 1993.

Only one month now remains of the 2010/11 fiscal year, in which the government expects to borrow $242bn, equivalent to ten per cent of GDP, down from $255bn in the 2009/10 fiscal year.

The government plans to virtually eliminate the budget deficit over the next four years.

Source:
Agencies
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