In February, Britain’s inflation rate increased for the first time in four months, shocking economists and putting pressure on the Bank of England to raise interest rates at its meeting on Thursday. According to the Office for National Statistics, the consumer price index increased to 10.4% in the year to February from 10.1% the previous month, as rising energy prices continued to pressure household budgets.
While experts predict that prices will fall sharply later this year, inflation is more than five times higher than the Bank of England’s 2% objective. When deciding whether to hike interest rates on Thursday, the central bank will weigh the need to manage inflation against concerns about the consequences from global financial problems.
The Bank of England has authorized ten consecutive rate rises, raising its benchmark bank rate to 4%. Analysts expect the Bank of England to hike interest rates by at least a quarter of a percentage point, as a base rate of 4% is unlikely to act as a drag on inflation.
