Inflation in the UK continues to soar, hitting 2.3% in February

LONDON — UK inflation surged once again in February, hitting 2.3% and passing the Bank of England’s 2% for the first time in more than two years, according to the latest data released by the Office for National Statistics on Tuesday.

The ONS said that the UK’s consumer price index — the key measure of inflation — was 2.3%, up from 1.8% in January. That was actually a bigger rise than economists polled before the release expected. The forecast had been for a 2.1% headline reading.

Core inflation figures, which strip out volatile goods like oil and food, also rose, climbing from 1.6% in January to 2% in February, ahead of the 1.8% forecast.

Despite increasing, inflation remains below the long-term trend — as the chart shows, inflation was more than 5% as recently as 2011 — however, for the first time in more than two years, inflation has now surpassed the Bank of England’s official 2% target. 

Prior to the Brexit vote, inflation stayed between -0.1% and 0.1% for 10 months due to a collapse in oil prices and a supermarket price war that led to slashed prices.

Prices started to pick up following the Bank of England’s decision to cut interest rates in the aftermath of the UK’s vote to leave the European Union, and the fall in the value of the pound. 

Expectations remain that inflation will continue to jump sharply in the coming months as the effects of the weaker pound — which has fallen roughly 19% since the Brexit vote — trickle into the real economy, pushing up the price of goods.

As a result, the Bank of England has said that it is willing to tolerate an overshoot in inflation beyond its 2% target over the coming months in order to protect jobs.

The Old Lady of Threadneedle street expects inflation to hit 2.8% by the end of 2017, while some economists have forecast price growth as high as 4%.

“Over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target. This effect is already becoming evident in the data,” the central bank said earlier in February at the release of its first Inflation Report of 2017. Britain is “very likely” to see “further substantial increases” in inflation “over the coming months,” the bank continued.

This is a breaking news story …

More from Business Insider UK:

NOW WATCH: Here’s which countries have the most billionaires

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.