Price increases in February picked up to 10.4% from 10.1% in January as the cost of food rose at the fastest pace since records began in 1989. That left the U.K. with the highest rate of inflation among the Group of Seven wealthy democracies.
Though the increase was unexpected given recent declines, economists still foresee the pace of inflation falling sharply in months ahead, as the country’s overall economic picture improves. Declines in the pace of price increases are expected from April, with the independent budget watchdog last week forecasting that the inflation rate would end the year at 2.9%.
“It is likely that the trend from here will be sharply lower this year,” said Tom Stevenson, an investment director at Fidelity International. “The latest reading for the year to February is a hangover from the past year’s energy, fuel and food price hikes and tells us little about where inflation is heading from here.”