Inflation rose to 10.4% in February

With the inflation rate rising again, the value of people's money has been further reduced and I doubt savings rates will follow suit. This is another serious blow to the Chancellor, savers, certain borrowers if the base rate rises and the broader economy. The cost of living crisis is still hitting households hard and faith in the UK government to control inflation is floundering fast.

High inflation is bad news for savers and this level of inflation is especially bad. Now all eyes are on whether the Bank of England reacts on Thursday and decides to raise interest rates for the 11th meeting in a row. This will affect borrowers on trackers and the wider property market if it subdues demand. This latest inflation data certainly provides the perfect excuse to hike rates again. I don't think the inflation figure of 10.4% was unexpected. Regardless of January being slightly lower, it was never going to be a smooth lower trajectory to reach the predicted 2.9% by the end of the year. However, the comparison figures against other G7 countries do look bleak.

Attention all small business owners: brace yourselves for a financial nightmare. The latest announcement of rising inflation, up to a shocking 10.4% in February 2023, is just another cruel blow in an already devastating economic landscape. The Bank of England will most likely react by raising interest rates, and it’s once again small businesses who will bear the brunt of this financial assault. The cost of borrowing is set to skyrocket, making it even more expensive for small business owners to get the funding they need to keep their businesses afloat. Those already struggling to keep their cash flow going may find themselves pushed over the edge into bankruptcy. The news of rising inflation also spells disaster for small business owners who have been relying on their savings to fund their company. Inflation erodes the value of cash reserves, which means that aspiring entrepreneurs are losing money every single day.

The jump of 0.4 per cent in February's inflation figure has really put the cat among the pigeons. Fearful of placing further pressure on bond prices, it was widely expected the central bank would leave the base rate unchanged at 4% when it meets tomorrow. With inflation proving stickier than many commentators thought, that now doesn't seem so likely and a further hike is quite possible.

This surprise rise in the inflation rate confirms that the Bank of England should not shy away from increasing the base rate at least by a further 0.5%, despite the global banking failures. The UK needs to force a lid on the inflation situation once and for all. Clearly rising rates will not be great news for certain borrowers.

After a week where the budget signposted inflation back to 2.9% by the end of 2023 and swap rates indicating that further interest rate rises may not be imminent, this morning’s Inflation data is a reminder to businesses that the route to both is not a straight line – and we are not there yet. Planning and budgeting to deal with, and trade out of, the current economic environment is still critical and necessary for many businesses.

With inflation currently reported at 10.4%, there appears to be a slowdown in comparison to the end of 2022. This along with positive measures around government activities and commitments is a positive position and outlook.
With still some way to go to curb and return to the targets reviewed by the PM were sure to still reactive rate increases throughout the remainder of 2023, we hope this is lower increases and for shorter periods.
If the banks and building societies pass these base rate increase onto savers we will return to a period where savers are seeing a return, although still far below the true cost of money (Money-inflating=devalue of savings).
the wider market remains positive, with employment stable and a GDP output positive for British exports and services. This focus on remaining competitive and active, we hope will continue to help the economy keep a looming recession at bay.

This latest inflation data is a disappointment as it makes the likelihood of another Base Rate rise more likely. It is a reminder that what we want and what happens are rarely in sync. We need to be patient and hope that the MPC take the same view and don't vote to hike rates.

This leaves the Bank of England between a rock with stresses in the banking system on one hand and persistent inflation on the other. It's always been a fine balancing act between controlling inflation and avoiding damaging the wider economy. Developments in the last week or so have just made the MPC's job even harder.

The last thing we need is another hike in the base rate as this will add more financial pressure on households and businesses already struggling with their financial affairs. The uplift in the inflation figure is purely down to food price inflation, which is hitting the poorest households the most, we are now at a point where enough is enough. My fear is another hike in the base rate will push many households and businesses over the edge, and further into debt, which will have huge implications on the wider economy further down the road.

These inflation figures are bad news for anyone that was hoping the base rate wouldn't rise again. It was starting to look like the base rate would remain at 4%, however, with inflation remaining stubbornly high they may feel obliged to act. High inflation is bad news for everyone, lets hope it starts to come down soon.

This increase in inflation will come as a surprise to many people but all you needed to do was complete a food shop or buy essential goods in recent weeks to see that prices are still rising.

This data will put the Bank of England in a difficult position as there are signs in some areas that the increases to the base rate are having an effect in addition to the squeeze that has been put on household incomes. But, if inflation remains stubbornly high will they have to continue making rises to the base rate to continue to combat this and will they run the risk of rising rates too far and impacting too hard on the economy?

It is my feeling that if the Bank of England hadn't been asleep at the wheel in relation to interest rates in 2018 & 2019 as well as once the economy opened back up in 2021 some if not all of this inflation misery could have been avoided.