UK consumer inflation reached its highest level in nine months last month, due to a new method for calculating energy bills. The Office for National Statistics said the Consumer Prices Index (CPI) hit 2.5% on an annual basis in February, up from 2.2% in January. But without the change in methodology, the figure would have remained at 2.2%.
Retail Prices Index inflation, which includes mortgage interest payments, remained the same at 4.1% last month.
But core inflation, which excludes oil and food, fell to 1.2% in February, the lowest level since August 2006.
The annual rate of 2.5% is above the government’s target of 2% and highlights the challenge facing the Bank of England of tackling rising inflation as the economy slows.
Many analysts expect the bank to further cut interest rates before year end in a bid to boost the economy.
