"Inflation is an important economic tool for the Chancellor"
- Jason Riddle of the pressure group Save Our Savers
Consumer prices in Britain increased at the fastest pace in nine months in February, sharpening the debate on whether the Bank of England should add more stimulus to the stagnant economy, the Office for National Statistics said Tuesday. The U.K. inflation rate rose to 2.8% from a year earlier, compared with 2.7% recorded in January, meeting analysts' expectations. On a monthly basis, prices increased 0.8% in February, the most since April 2011. The increase was mostly provided by a gain in housing, water, electricity and gas prices. With price gains highly above the BoE's inflation target, Chancellor George Osborne may give policy makers more flexibility in order to stimulate growth.
"Over the next few months inflation should pick up and we're not expecting it to get to target for many years," said Philip Rush, an economist at Nomura International Plc in London.
"Inflation is an important economic tool for the Chancellor. In it he has an ally that is systematically reducing the real value of the UK's debt, and, at the same time, by manipulating the measures used to report inflation, he is able to reduce Government spending that is index-linked to it," said Jason Riddle of the pressure group Save Our Savers.
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