Inflation rises on increases in the cost of food and wine

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Food and alcohol price rises helped push inflation higher in February, the first rise since August 2018.

The rate of price changes, measured using the Consumer Prices Index (CPI), rose to 1.9%, from 1.8% in January.

House prices are rising at their slowest rate for almost six years, the Office for National Statistics said.

Inflation overall was “stable”, with rising food and alcohol prices offset by slower price rises in clothing and footwear, the ONS’s Mike Hardie said.

Duty on a bottle of wine rose on 1 February, pushing the cost of a bottle up by 8p. The tax rise was announced in the Autumn Budget, alongside a rise in duty on some some high-strength sparkling cider.

Inflation fell slightly in January after the introduction of a cap on domestic energy prices.

The Bank of England targets an inflation rate of 2%. The rate of rises peaked at a five-year high of 3.1% in November 2017 and was last at 1.8% in January 2017.

Ruth Gregory, senior UK economist at Capital Economics, said inflation was unlikely to stay below 2% for long and the rise marked “the start of an upward trend which could see inflation reach 2.5% by April”.

Suren Thiru, head of economics at the British Chambers of Commerce (BCC), said raising the level of the energy price cap in April would mean there would be upward pressure on prices over the next few months.

“Businesses also continue to report that the cost of imported raw materials are rising,” he said. However, he said that over the longer term, inflation would remain near the Bank of England’s 2% target level because of “the UK’s weakening economic outlook”.

House prices

The ONS said UK house prices in January rose by an annual 1.7%, the smallest increase since June 2013.

The lower rate of house price rises was in large part down to a 1.6% fall in London house prices.

Prices in the capital are 3.3% below their peak in June 2017, the ONS said.

Jamie Durham, economist at PwC, said: “This decline is driven by ongoing uncertainty around Brexit – London has been particularly affected due to its integration with the rest of Europe.”

“London is not the only area with falling prices. House prices in the East of England also fell on an annual basis for the first time since October 2011, and declined by -0.2%.

“Elsewhere in the UK, strong positive house price inflation continued in the Midlands, and particularly the East Midlands. The North West and Yorkshire and the Humber also showed strong annual house price growth, of 3.4% and 2.9% respectively.”

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