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21 March 2017
UK inflation rose to 2.3 per cent in February, according to figures released by the Office for National Statistics today (21st March 2017).
Joel Dungate, investment analyst at Redmayne-Bentley, said:
“The inexorable upward surge in UK inflation continues. The consumer price index rose by 2.3 per cent on a year-on-year basis in February, up from 1.8 per cent in January. The figure is the highest since September 2013 and above the Bank of England’s target level of 2 per cent.
“In the short-term, this increase is unlikely to cause too much alarm for the Bank, as it has forecast that inflation will reach 2.8 per cent during the year. However, the weakness of Sterling and the strength of the US Dollar, in particular, due to last year’s votes for ‘Brexit’ and President Trump, have been major contributors to the recent rise and may drive consumer prices higher than forecast. Last week, one member of the Monetary Policy Committee voted for a UK rate rise due to inflation concerns, so further rises may create a dilemma as the economic impact of Brexit is still unclear.
“Another major factor is the UK consumer, who has been the driver of the UK economy. January figures showed that the gap between wage increases and inflation was narrowing and today’s number will close that further. This may raise concerns that consumer spending will fall, and if that were to happen, it would be a negative for both the economy and the UK government.”
Notes to the Editor
Established in 1875, Redmayne-Bentley is one the UK’s largest independently owned investment management and private client stockbroking firms, with 37 regional offices throughout the UK and in the Republic of Ireland.
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