BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 

Tuesday, 20 March, 2001, 11:48 GMT
UK inflation nudges up to 1.9%

Inflation in the UK has risen slightly to 1.9%, but remains well below the government's target of 2.5%.

The unexpected rise in the so-called underlying rate of inflation (excluding mortgage rates) was fuelled by higher petrol and car insurance costs.

It is a clear signal to the market not to expect interest rate cuts

Dave Mohr, Citadel Securities

However, it the costs of mortgage repayments are included - in the so-called headline rate of inflation - the rate was unchanged at 2.7%, the Office for National Statistics (ONS) said.

Analysts, though, had expected this rate to fall.

Rising meat costs due to the foot and mouth crisis did not feed through to February's inflation data.

Lowest level

The figures are expected to leave plenty of scope for the Bank of England to cut interest rates further in the coming months.

Ross Walker, of the Royal Bank of Scotland, said: "There is still plenty of scope for the Bank of England to cut rates (from 5.75 percent)."

He said the markets were more concerned about the US Federal Reserve's decision on interest rates later on Tuesday.

But some analysts were sceptical about the prospects of a UK interest rate cut in the near future.

Dave Mohr, an economist at Citadel Securities, says: "The figures were slightly higher than expected.

"The significance of this, in light of the monetary policy review released on Monday is that, it is a clear signal to the market not to expect interest rate cuts."

The inflation rate fell sharply in January, to 1.8%, the lowest level since the current system of measuring consumer prices began in 1976.

Inflation has now been below target for 22 months.

The ONS said the main reason for the January fall was the 4p per litre cut in unleaded petrol.

The government has re-shuffled the 650 food and household items it uses to calculate inflation.

Search BBC News Online

Advanced search options
Launch console
BBC RADIO NEWS
BBC ONE TV NEWS
WORLD NEWS SUMMARY
PROGRAMMES GUIDE
See also:

16 Mar 01 | UK Politics
Council tax 'rises above inflation'
13 Feb 01 | Business
UK inflation at record low
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories