Between January and February, housing costs increased by 0.5 percent, and rising gas prices added 1.2 percent to transportation costs. Wage increases averaged just over one percent, putting a squeeze on consumer spending power and limiting potential growth throughout the coming year, according to The Guardian.
While inflation has stayed at just above two percent for the past four years, the Bank of England expects the level will increase to around three percent in the next year.
The U.K.’s Office for National Statistics also published two other inflation measures, including the CPIH and RPIJ. The CPIH, which excludes housing costs, increased from 2.5 percent to 2.6 percent, and the RPIJ, which is designed to eliminate disparities between the consumer price index and retail price index, decreased from 2.7 percent to 2.6 percent in February, The Guardian reports.
James Knightley, an economist at ING, said that a recent increase in producer prices indicates that inflation is more towards the point of origin.
“Consequently, household incomes remain squeezed by the fact wages are still failing to keep pace with the cost of living with Wednesday’s budget unlikely to offer any significant respite,” Knightley said, according to The Guardian .