Price inflation has reached its highest level since 2008, with the Consumer Prices Index (CPI) measure of inflation reaching 4.4%.
This measure of inflation has risen from 4% in the year to January.
Inflation continues to face several upward pressures, including domestic heating costs, clothing and footwear.
Looking at the contribution to inflation from these sectors, it is clear that the timing of some of the price rises between January and February was unfortunate and has contributed to higher than expected inflation.
The Retail Prices Index (RPI) measure of price inflation, which includes mortgage interest and housing costs, has risen from 5.5% for the year to February 2011. It stood at 5.1% in January.
We also saw today the publication of comparative figures with Europe, for the year to January.
CPI in Europe as a whole stood at 2.8% in January, compared to 4% in the UK.
These latest figures are bound to prompt renewed calls for an urgent interest rate rise. It remains debatable whether hiking interest rates would do much to deal with this rising price inflation or simply dent prospects for economy recovery.
These latest inflation figures come shortly after a new report from the Institute for Fiscal Studies (IFS) which shows that British households have experienced their biggest drop in living standards for 30 years.
The average level of ‘real’ income for a family has fallen by 1.6% over the three year period to the end of 2011. This is in contrast with the average 1.6% a year increase in real income experienced over the previous fifty years.
In monetary terms, this means that the average household has lost £1,080 of spending power over the three year period.
Looking ahead, the report warns that household incomes are likely to remain stagnant for some time. This is partially due to government spending cuts and higher taxation required to cut the budget deficit.
Here at Informed Choice, we recognise that many savers have difficult decisions to make in light of these stubbornly high inflation figures and with interest rates remaining at historic lows.
We urge savers who are concerned about the impact of inflation on their wealth to speak to us about the various options available for understanding how much money needs to be exposed to risk in order to stand a chance of keeping pace with inflation.
