Inflation hits 4.4pc with more price rises on way

The Consumer Price Index (CPI) rate of inflation hit 4.4 per cent in February, up from 4 per cent in January, driven by increases in the cost of a wide range of essential items, the Office for National Statistics (ONS) said.

Core CPI, which strips out volatile goods such as oil and food, reached its highest level since records began in 1997, the ONS added.

Highlighting the pain faced by ordinary households, the ONS said transport costs rose 0.8 per cent in the month after petrol and diesel prices hit record highs of £1.29 and £1.34 per litre due to turmoil in the Middle East and North Africa.

And the price of clothing and footwear showed a record monthly increase as January’s VAT rise to 20 per cent from 17.5 per cent was passed on to consumers and retailers, bringing in bigger than normal increases following the post-Christmas sales.

Rising cotton prices helped push high street clothing prices up 13 per cent in the past year and women’s clothes up 19 per cent, it emerged.

Utility bills were up 3.1 per cent year-on-year after all the big six energy providers increased rates in recent months, creating the biggest surge in prices since 2009.

With the Bank of England’s 2 per cent target disappearing from view, the pressure for interest rates to rise from their historic low of 0.5 per cent grew stronger.

Bank of England policymaker Andrew Sentance, a long-time campaigner for higher rates, warned in a speech that inflation could easily rise above 5 per cent this year. He added that failure to act now risked a “more abrupt and destabilising rise in interest rates in the future.”

His comments came as a manufacturing survey by the CBI signalled the price increases are set to continue after a balance of 33 per cent of firms predicted price rises over the next quarter, up from 32 per cent in February.

And the ONS said that the soaring price of oil had yet to fully filter through to consumers.