The latest data released by the Office for National Statistics puts the Consumer Prices Index for February at 4.4% with the Retail Prices Index even higher at 5.5%.
The CPI, being the Treasury's preferred measure of inflation, is the one that the Bank of England are tasked with keeping at or about 2% by altering interest rates. In January it was 4% but the BoE Monetary Policy Committee refuses to raise interest rates to dampen inflation rises as most of the members of the committee see the inflationary pressures as a temporary phenomenon. With the EU sitting at 2.8% this will make it uncomfortable position for the coalition to be in.
The ONS says that domestic heating costs, clothing and footwear, miscellaneous goods and services such as mortgage arrangement fees and foreign exchange charges as well as recreation and culture were the main drivers in the upward pressure on prices.
Any downward pressure that was felt mainly came from alcoholic beverages and tobacco.
This latest news will come as some welcome support for BoE MPC hawk Andrew Sentance, who has been calling for a rate rise for sometime now. But he is to be replaced in May by Ben Broadbent, Goldman Sachs' chief economist. Broadbent has in the past made both hawkish and dovish comments on interest rates and has said that sterling needs to be weak for the recovery to work. But he has also argued in a recent GS report that the country is not as vulnerable to a rate rise as some might think. We'll just have to wait and see which way he jumps.
But back to the position with alcohol and tobacco. Isn't it strange that, with prices going up across the board including the necessities of life, the two probably most damaging items that we can (legally) buy are coming down in price?