Inflation hits 15-year high

Higher mortgage repayments have driven inflation to its highest level for more than 15 years, official figures show.

The Office for National Statistics (ONS) said the Retail Prices Index (RPI), which includes mortgage payments, jumped to 4.6 per cent in February from 4.2 per cent the previous month.

That was its highest level since August 1991 and will fuel concerns that interest rates may rise again next month.

The sharp rise was caused by lenders passing January's shock quarter-point interest rate hike to homeowners, the ONS said.

Howard Archer, chief UK and European economist at Global Insight, said: "We suspect that February's inflation data reinforces the likelihood that the Bank of England will raise interest rates by a final quarter-point to 5.5 per cent in April or May as a precautionary measure against medium-term inflation risks."

The Consumer Prices Index (CPI), which is the Bank of England's official measure, also rose to 2.8 per cent in February from 2.7 per cent, fuelled by rising air fares, food, furniture costs and car purchases. The increase came despite falling petrol costs.

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