The Consumer Price Index (CPI) measure of inflation rose from 10.1% in January to 10.4% in February, according to Office for National Statistics figures published this morning.

Ouch. If it wasn’t difficult enough, this morning’s surprise inflation figures make the Bank of England’s job even harder. It’s not good news for the rest of us either.

Annual inflation rates rise again following the easing in Jan 2023:

▪️ Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 9.2% in the 12 months to Feb 2023, up from 8.8% in Jan 2022
▪️ CPI rose by 10.4%, up from 10.1%

➡ https://t.co/VVfmybQmsG pic.twitter.com/l1dXAi7yyk

— Office for National Statistics (ONS) (@ONS) March 22, 2023

The Consumer Price Index rose 10.4 per cent year-on-year in February according to the Office for National Statistics, much more than the 9.9 per cent forecast by the Bank of England and economists polled by Reuters. Annual price rises linger in double digits for a sixth month in a row.

Core inflation, which strips out volatile food, energy, alcohol and tobacco prices, also rose sharply to 6.2 per cent in February, up from 5.8 per cent the previous month. Again, economists had predicted a narrow decline. Sterling jumped 0.4 per cent against the dollar this morning.

The Bank of England will make its rates decision at midday tomorrow, with analysts expecting a quarter-point increase. Chancellor Jeremy Hunt has said that the Bank of England should remain focused on taming “dangerously high” inflation, despite the strain placed on the global banking sector by rising interest rates.

Ouch. If it wasn’t difficult enough, this morning’s surprise inflation figures make the Bank of England’s job even harder. It’s not good news for the rest of us either.

The Consumer Price Index rose 10.4 per cent year-on-year in February according to the Office for National Statistics, much more than the 9.9 per cent forecast by the Bank of England and economists polled by Reuters. Annual price rises linger in double digits for a sixth month in a row.

Core inflation, which strips out volatile food, energy, alcohol and tobacco prices, also rose sharply to 6.2 per cent in February, up from 5.8 per cent the previous month. Again, economists had predicted a narrow decline. Sterling jumped 0.4 per cent against the dollar this morning.

The Bank of England will make its rates decision at midday tomorrow, with analysts expecting a quarter-point increase. Chancellor Jeremy Hunt has said that the Bank of England should remain focused on taming “dangerously high” inflation, despite the strain placed on the global banking sector by rising interest rates.

So what’s this mean to savers and retirees?

Becky O’Connor, Director of Public Affairs at PensionBee, told me:

“People may have been hoping for some light at the end of the tunnel of ever-increasing inflation, so this month’s data will be disappointing.

“High inflation is hard to cope with day-to-day, but if you are also trying to build long term wealth, it makes it even more difficult to meet your future goals for retirement.

“Pension saving becomes an uphill battle in times of higher inflation. Against this backdrop, people need iron will and discipline to take positive steps with their pension, like increasing contributions. Not only is it harder to find the spare cash to make contributions, it also makes it harder to generate a ‘real’ return above inflation, so your money still has purchasing power when you need it later on.

“For pensioners, the rise in the State Pension in a few weeks, from £185.15 to £203.85 a week for the New State Pension and from £141.85 to £156.20 for those on the Basic State Pension, cannot come soon enough.

“For anyone already drawing an income, coping with inflation on a finite pot of money is a difficult and stressful slog. A full State Pension and average private pension pot should be enough to cover the basics in life, like food and heat. But with inflation continuing to go the wrong way, covering the basics remains a challenge for all, but particularly those on low, limited incomes.”

PensionBee has an inflation calculator to help people work out the impact of inflation on their pension savings.