“These figures confirm a disheartening rebound in inflation as rising air fares and the introduction of VAT on private school fees contributed to notably widen the gap with the Bank of England’s 2% target.
“In the coming months, the only way will be up for inflation, with higher energy costs from April, the looming national insurance rise and global trade frictions likely to lift the headline rate close to 4% by the summer.
“While it will make for awkward reading for rate setters, rising services inflation could eventually slip into a more consistent downward trajectory if the squeeze from loosening labour market conditions filters through into weaker wage growth.
“This increase means that a March rate cut currently looks improbable. With inflation headwinds mounting, including April’s major rise in business costs, a May loosening – while still likely – is not yet a foregone conclusion.”
ENDS
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