Increase in inflation announced by ONS
On March 22, 2023, the Office for National Statistics (ONS) released official data indicating that UK inflation had increased in February, marking the first such increase in six months. This development has left the Bank of England in a tricky position with respect to interest rates. The Consumer Price Index (CPI) showed a rise of 10.4% in the 12 months leading up to February 2023, up from 10.1% in January 2023. The core inflation rate, which excludes volatile items like food, energy, alcohol, and tobacco, also increased from 5.8% in January to 6.2% in February.
The increase in inflation was primarily driven by a surge in alcohol prices at pubs and restaurants, as well as shortages and rationing of certain salad and vegetable produce caused by adverse weather conditions. However, this rise was partly offset by a continued decline in fuel prices. The annual inflation rate for restaurants and hotels was 12.1% in February, the highest since July 1991, largely due to a rise in restaurant and cafe prices, which increased by 11.4% in the same month.
The increase in food and non-alcoholic beverage prices was the highest in over 45 years, with vegetables experiencing the greatest upward effect due to shortages of salad produce and other vegetables caused by bad weather in southern Europe and Africa, as well as higher electricity prices for produce grown out of season in UK and northern European greenhouses. Conversely, the annual inflation rate for transport slightly eased to 3.1% in February, the lowest rate since February 2021, down from the peak of 15.2% in June 2022. On a monthly basis, CPI rose by 1.1% in February 2023, with the most significant contributions coming from restaurants and cafes, food, and clothing.
The report summarised the main points:
The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 9.2% in the 12 months to February 2023, up from 8.8% in January.
The largest upward contributions to the annual CPIH inflation rate in February 2023 came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.
On a monthly basis, CPIH rose by 1.0% in February ICAEW 2023, compared with a rise of 0.7% in February 2022.
The Consumer Prices Index (CPI) rose by 10.4% in the 12 months to February 2023, up from 10.1% in January.
On a monthly basis, CPI rose by 1.1% in February 2023, compared with a rise of 0.8% in February 2022.
The largest upward contributions to the monthly change in both the CPIH and CPI rates came from restaurants and cafes, food, and clothing, partially offset by downward contributions from recreational and cultural goods and services (particularly recording media), and motor fuels.
Source: ONS Consumer price inflation
