Unfortunately consumer prices crept up again to an inflation rate of 10.4% in February, according to the latest figures.
Inflation is the rate at which prices for goods and services have increased over the last 12 months, so it is seen as a marker for how the UK economy is doing.
The Office for National Statistics (ONS) revealed this increase after economists had predicted inflation would fall to below January’s rate of 10.1%.
Here’s what you need to know.
Why is inflation so important?
The Bank of England aims to keep inflation at 2%, so the economy grows at a steady rate.
The current rate is too high, meaning consumers end up paying unaffordable rates for goods and services – and wages are definitely not going up at the same pace.
So that means what is in your pocket doesn’t end up going nearly as far as it did a year ago.
Why is this 10.4% stat particularly bad?
It’s a bit of shock considering economists had predicted a decline in inflation to 9.9% for February.
It’s also the first time UK inflation has risen in four months, and means we’re creeping back to the 41-year high figures we saw in October 2022 of 11.1% inflation.
It also means real wages are still falling.
As Resolution Foundation’s James Smith pointed out: more expensive food means “lower-income families are facing the greatest price pressures of all, with an effective inflation rate above 12%”.
What caused it?
Higher prices in restaurants and cafes, and an increased cost of food and clothing all drove February’s inflation rate increase.
Chief economist for the ONS, Grant Fitzner, said experts had not been expecting “an increase in the price of alcohol in pubs and restaurants in February after some discounting” in January.
The inflation rate of restaurants and hotels rose by 12.1%, up from 10.8% in January. The ONS says that is the highest rate since July 1991.
Food and non-alcoholic drink
Meanwhile, food and non-alcoholic drink price inflation is at a 45-year…