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High UK inflation piles on pressure to hike rates

AFP  |  \R London 

Britains annual rate held at 3.0 per cent in January, official data showed today, piling more pressure on the to hike interest rates soon, according to economists.

The comes less than one week after the (BoE) warned that it could lift interest rates more quickly than expected to help bring down

"The Index (CPI) 12-month rate was 3.0 per cent in January 2018, unchanged from December 2017," the Office for National Statistics (ONS) said in a statement.

The rate had hit 3.1 percent in November, which was the highest level in almost six years.

Analysts had however expected the January print to show a slightly lower rate of at 2.9 percent.

The ONS said that smaller increases in were offset by a pick-up in prices for clothing, footwear and recreation.

"UK inflation came in higher than expected in January, adding further pressure for (BoE) policymakers to hike interest rates again, possibly as soon as May," said

"However, with mounting signs of economic growth slowing at the start of 2018, a May rate rise is by no means a done deal and will likely be dependent on the data flow improving in coming months."

Inflation jumped last year and remains at an elevated level after Britain voted to leave the in 2016.

The Brexit referendum pushed down the pound, in turn hiking the cost of imported goods.

As a result, the raised its main in November 2017 for the first time in a decade. However, it chose to keep the rate at 0.50 percent in both December and January.

Inflation has now held above the BoEs crucial 2.0-per cent target level for 12 successive months.

"This adds further weight to the case for higher interest rates sooner rather than later," said Ben Brettell, a senior at

He added: "Policymakers said last week (that) they will try and bring inflation back to target more quickly than previously expected, which means rates could rise faster and further than anticipated." Brettell also noted that it now appears that the next increase "may well happen in May".

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, February 13 2018. 20:40 IST