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Inflation Rises to a Nine Month High in the U.K.

U.K. inflation accelerated to the fastest pace in nine months in February and factory-gate prices increased twice as much as forecast as energy costs surged.

Consumer prices rose 2.8 percent from a year earlier, compared with 2.7 percent in January, the Office for National Statistics said in London today. That matched the median of 35 estimates in a Bloomberg News survey. Producer prices increased 0.8 percent from the previous month, the most since April 2011.

Higher energy bills and a weaker pound have fueled price pressures in recent months. That’s adding to the squeeze on consumers as they brace for another austerity budget by Chancellor of the Exchequer George Osborne tomorrow. With price gains above the Bank of England’s 2 percent target, Osborne may also flag changes to the central bank’s mandate to give policy makers more flexibility to stimulate growth.

“The economy is going nowhere fast and the BOE has said it will essentially look through above-target inflation,” said Rob Wood, an economist at Berenberg Bank in London. “Whether of its own volition, or because the chancellor tweaks its inflation remit in the budget, we continue to expect the BOE to add more monetary stimulus this year.”

The pound erased its decline against the dollar after the data were published. It was trading at $1.5125 as of 11:28 a.m. inLondon, up 0.1 percent from yesterday….”

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