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Transport costs push up inflation

Inflation rose in February thanks largely to a hike in transport costs, new figures from the Office for National Statistics (ONS) have revealed.According to the consumer price index (CPI), annual inflation rose to 2.8 per cent in February up by 0.1 percentage point from January.A rise in air fares and smaller contributions from sea travel helped push up the CPI, while there were also broader increases across a range of household goods.Among these were personal care appliances and also food and non-alcoholic beverages, with a hike in prices particularly evident in fresh food.The ONS also revealed a sharp hike in the retail prices index (RPI), which rose to 4.6 per cent in February, up by 0.4 percentage points on January to the highest rate since 1991.Housing costs were among the main factors in driving up the RPI, with mortgage interest payments reacting to the quarter-point increase in the base rate by the monetary policy commission (MPC) earlier this year.The rise in the rate of inflation will be pored over by analysts, particularly in light of the MPC's actions in recent months, as the Bank of England seeks to curb the rate of price increase.Any sustained increase in inflation is likely to ramp up the pressure on the MPC to issue another interest rate rise and, with many analysts already predicting another quarter-point increase in the coming months, momentum for further hikes could grow.

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