A record monthly increase in the price of clothing between January and February meant the Consumer Price Index (CPI) rose to 4.4 per cent last month.
The official government measure for inflation increased by 0.4 per cent in February, as clothing and footwear prices jumped 3.6 per cent year-on-year.
February saw the Retail Price Index, which includes mortgage and council tax charges and was replaced last year by the current government with the CPI, climbed 0.4 per cent to 5.5 per cent - the highest it has been for 20 years.
Alcohol & tobacco prices were the biggest downward pressure on inflation during the month, dropping 1.1 per cent during the month but almost all segments saw price rises.
Figures were compiled by the Office for National Statistics, which said that the traditional end of January’s promotions were the biggest cause of the increasing inflation in clothing however the jump in these prices last February was just two per cent.
Earlier in the month the British Retail Consortium (BRC) and Nielsen’s Shop Price Index showed non-food inflation growing to 1.6 per cent year-on-year as January’s VAT rise started to feed through to consumer prices.
Consumer confidence and disposable household incomes have both fallen in recent months and so with the price of goods continuing to rise, retailers will find it even higher to encourage customers to spend.
Jonathan Loynes, Chief European Economist for Capital Economics, commented that today’s figures created a “distinctly unfavourable backdrop to tomorrow’s Budget”
“February’s further rise in CPI inflation from 4.0 per cent to 4.4 per cent (the consensus forecast was 4.2 per cent) underlined the threat to the public finances from the squeeze on households’ spending power, and perhaps company profits, caused by high inflation,” Loynes added.
Chancellor George Osborne will now have increased pressure on him to spell out plans tomorrow that will both boost spending and increase growth, whilst also cutting the deficit.