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UK inflation rises to highest level since May 2012

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UK inflation rose from 2.7% to 2.8% in February as rising energy prices pushed the reading to its highest level since May of last year.

The rise in CPI, in line with economists’ expectations, comes after four consecutive months of inflation standing at 2.7%.

The headline rate is the highest since May last year, when CPI inflation stood at 2.8%, down from 3% in April 2012.

Rising gas and electricity bills, coupled with price changes for petrol, air transport and some consumer goods, were the largest contributors to last month’s increase.

The largest downwards pressure came from smaller rises in food prices than were seen a year ago, and a fall in alcohol prices.

RPI inflation, meanwhile, dropped slightly to 3.2%, according to the Office for National Statistics. Consensus expectations had predicted RPI would remain at 3.3%.

The reading is the first since the UK Statistics Authority stripped RPI of its role as an official national statistic.

A new RPIJ measure, which uses a different calculation process, recorded inflation at 2.6% in February.

The new CPIH measure, meanwhile, which takes into account owner occupiers’ housing costs, rose from 2.5% in January to 2.6% in February.

“Inflation looks likely to rise further to a peak of about 3.5% over the summer, driven in part by rising food and petrol prices. And while it should ease back thereafter, the rise in import prices likely to result from the recent fall in the pound could slow that fall,” said Capital Economics’ chief UK economist Vicky Redwood.

After falling as much as 8% against the dollar this year, sterling strengthened slightly on the news, moving back towards $1.51.

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