Energy costs contribute to inflation rise

INFLATION nudged up 0.1% in February to 2.8%, partly due to higher fuel bills.

It’s the first time the Consumer Prices Index (CPI) measure of inflation has increased in four months after being stuck at 2.7%.

The Office for National Statistics said the largest upward contributions to the change in the rate came from the expected increases in many gas and electricity bills, and from price changes for some recreational goods, motor fuels and air transport.

The largest downward contributions came from smaller price increases for food and soft drinks than a year ago and price falls for alcohol compared with price rises a year ago.

Dr Brian Sloan, chief economist at Greater Manchester Chamber of Commerce, said: “Inflation continues to rise as we have been warning for many months. Whilst this remains a concern for households and consumer demand, we must also be clear that this is having considerable impact on businesses and ultimately the public sector finances; causing a negative feedback loop of pressure for the UK economy.

“For businesses inflation has created pressure on costs, especially energy prices that include the Climate Change Levy and business rates that are set using inflation measures. In addition to this, the pressure on sterling is causing inflation for input prices of imported goods and materials.”