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Food and alcohol prices push inflation higher

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Higher food and alcohol prices helped push UK inflation up slightly in February.

The Consumer Price Index (CPI) was 1.9% last month, up from 1.8% in January – coming in just below the Bank of England’s 2% target, according to the Office for National Statistics (ONS).

The ONS said: “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 2019.

“The largest, offsetting, downward contribution came from clothing and footwear.”

It marks the first time that inflation has increased since last summer.

Alistair Wilson, head of retail platform strategy at insurer Zurich, said: “Inflation holding relatively steady, the highest levels of employment since 1971, and wages increasing at their fastest pace in over a decade gives a rosy shine to the UK’s economic position.

“Workers may feel wealthier with more cash in their pockets and increased spending power, a welcome boost for households recovering from squeezed earnings.”

However, he warned the boost could be short-lived, thanks to Brexit uncertainty.

Ben Brettell, senior economist at Hargreaves Lansdown, said: “If Theresa May can somehow find a way to break the political deadlock in Westminster and Brexit happens in a relatively orderly fashion, we could see rates gently nudge up later this year.

“If we leave with no deal, however, all bets are off. I’d expect inflation to spike as sterling weakens, but the Bank has shown willingness in the past to look through this type of inflation and keep interest rates low to support the economy. I’d expect them to do the same here.”

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