Inflation figures under spotlight amid fears of summer price spike

Bank of England policymakers will be keeping a close eye on key inflation figures this week amid concerns that prices could spiral over the summer months.

In February, the Office for National Statistics said the consumer prices index (CPI) measure of inflation increased to 0.7 per cent in January from 0.6 per cent a month earlier. Picture: Greg Macvean

There are predictions that the consumer prices index (CPI) measure of inflation may have nudged higher last month after January’s increase in the annual rate, to 0.7 per cent from 0.6 per cent the month before. February’s outcome was ahead of expectations, with a consensus of economists having predicted a fall to 0.5 per cent.

Kevin Brown, savings specialist at Scottish Friendly, said: “We are yet to see the true impact of inflation of a vast increase in supply of money to UK households over the past 12 months.

“Until now, all this extra money sloshing around the economy has not impacted prices because of limitations on consumer spending. But there is now huge pent-up spending demand among certain quarters of the population and that will quickly be released as soon as lockdown restrictions are lifted.

“Over the course of 2021 we are therefore likely to see inflation rise above and possibly well beyond the Bank of England’s 2 per cent target.”

However, Nigel Green, chief executive and founder of deVere Group, said heightened fears about inflation were being overplayed.

“As the world increasingly looks towards a post-pandemic global economic rebound, inflation fears have been heightened in recent weeks,” he noted.

“I think that we should expect a short-term jump in prices as economies re-open, however, longer-term inflation fears, due to pent-up demand are premature and are being overplayed.”

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