The Office for National Statistics (ONS) said the consumer prices index (CPI) measure of inflation reached 2.3 per cent last month, up from 1.8 per cent in January.
The move is the first above-target rise since November 2013 and will put pressure on the Bank’s monetary policy committee (MPC) to hike interest rates beyond 0.25 per cent this year.
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Calum Bennie, savings specialist at Scottish Friendly, said: “If proof was needed that a squeeze is underway, this is it.
“And with prices expected to rise further this year as a result of the fall in sterling, things will only get tougher for consumers whose wages are not rising sufficiently to keep pace. Shopping smarter or even cutting back spending are some of the ways we will cope while still trying to put money aside for the future.”
HM Treasury said: “The government appreciates that families are concerned about the cost of living, and that is why we are cutting tax for millions of working people, increasing the national living wage to £7.50 per hour from next month, and freezing fuel duty for the seventh year in a row.”
It comes as the ONS switched to its preferred measure of inflation from CPI to CPIH, which includes costs associated with living in, maintaining and owning a house. The CPIH measure also reached 2.3 per cent, up from 1.9 per cent in January.
ONS deputy national statistician Jonathan Athow said: “Inflation has risen to its highest rate for almost three-and-a-half years with price increases seen across a range of items but with food and fuel having the largest impact.”
The price of food rose by 0.3 per cent between last month and February 2016, after falling on the year for 31 consecutive months.
The supermarket price war had kept a lid on price rises, but food is now becoming more expensive as producers begin to pass down soaring import costs triggered by the pound’s slump since the EU referendum result.
Overall food prices lifted 0.8 per cent between January and February, in contrast to a smaller rise of 0.1 per cent a year earlier, after shock weather conditions in southern Europe ravaged crops and left supermarkets and restaurants grappling with a vegetable shortage.
The ONS said the price of iceberg lettuce jumped 67.2 per cent between January and February after falling 0.8 per cent a year earlier.
A jump in transport costs was also driving inflation higher, with motor fuels rising 1.2 per cent month-on-month in February.
The price of petrol lifted by 1.6p per litre at the pumps to 120.2p for February, while diesel increased by 1.3p to 123.2p.
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Kristin Forbes, one of the nine rate-setters on the MPC, broke rank to vote for an interest rate hike to 0.5 per cent last week amid fears that inflation is “rising quickly and was likely to remain above target for at least three years”.
Forbes, who is set to finish her three-year term on the MPC at the end of June, has “consistently been at the hawkish end of the MPC” according to Howard Archer, chief UK and European economist at IHS Global Insight, who believes she may have wanted to “get her viewpoint strongly across” before she leaves the Bank to return to the Massachusetts Institute of Technology’s Sloan School of Management.
The Bank of England, which will continue to use CPI as its measure for setting interest rates, predicted inflation to lift to 2 per cent in February, peaking at 2.8 per cent in the first half of next year, before falling back to 2.4 per cent in three years’ time.
The retail prices index, a separate measure of inflation, rose to 3.2 per cent in February, up from 2.6 per cent in January.
Maike Currie, investment director for personal investing at Fidelity International, said: “With February’s inflation rate at 2.3 per cent and pay growth coming in at 1.7 per cent, real wage growth has turned negative.
“If inflation continues to tick up and wage growth remains lacklustre, we will all be getting progressively poorer as each month rolls round. This squeeze on the UK consumer is bad news because consumer spending is the backbone of the UK economy.”