British inflation edges higher as Brexit looms

LONDON: British annual inflation nudged higher in February, official data showed on Wednesday, as Britain faces uncertainty over its planned departure from the European Union.
The Consumer Prices Index 12-month rate climbed to 1.9 per cent last month, up from a two-year low of 1.8 per cent in January, the Office for National Statistics (ONS) said in a statement.
“Rising prices for food, alcohol and tobacco, and across a range of recreational and cultural goods produced the largest upward contributions to change in the rate between January and February,” the ONS said.
“The largest, offsetting, downward contribution came from clothing and footwear, with prices rising between January and February… but by less than between the same two months a year ago.” Britain’s annual inflation remains under the Bank of England’s 2.0 per cent target, which on Thursday is widely expected to announce no change to its main interest rate, currently at 0.75 per cent.
“The Bank of England is clearly going to sit tight on interest rates until there is greater clarity on the Brexit situation and it can see how the economy is being affected,” noted EY economist Howard Archer.
“Indeed, there is a very real possibility that the Bank of England will keep interest rates at the current level of 0.75 per cent through 2019.
“The current muted state of the UK economy hardly calls for higher interest rates despite the tightness of the (UK) labour market and recent firmer earnings growth,” he added.
The new data was released on Wednesday — just nine days before Britain is scheduled to leave the EU — as it was revealed British Prime Minister Theresa will request a short delay to Brexit from Brussels. — AFP