Inflation in the UK has climbed back up to 10.4% in the year to February, the Office for National Statistics (ONS) has revealed.

This follows the 10.1% reported by the ONS for its consumer prices index (CPI) inflation rate for the 12 months to January.

In the Chancellor’s Budget last week, Jeremy Hunt told MPs that forecasts by the Office for Budget Responsibility (OBR) suggest inflation will fall to 2.9% by the end of 2023, as he said the UK would avoid a “technical recession”.

However, some industry experts have described the latest movement on inflation as a “surprise”, after the ONS said the increase in the annual CPI rate between January and February is a result of prices increasing on a monthly basis by 1.1% in February, which compares with a smaller increase of 0.8% in February last year.

Price increases contributing to this latest monthly change came from from restaurants and cafes, food and clothing, the ONS stated.

Chief economist at Mazars, George Lagarias, commented that UK inflation had “surprisingly accelerated”.

“This was mostly due to higher energy and food costs, not discretionary consumption,” Lagarias said. “This confirms our earlier view that the recent OBR year-end 2.9% inflation projections may have been on the optimistic side.

“On the one hand, the number confirms that the economy is not slowing down as much as originally expected. On the other, the CPI figure paints a grim picture for consumers who are facing more difficulties meeting everyday expenses.”

Head of personal finance at Hargreaves Lansdown, Sarah Coles, added” “The surprise rebound in inflation may well convince the Bank of England that it needs to keep raising rates. Not only is overall inflation still in double-figures, and on the rise, but core CPI is also up from 5.8% last month to 6.2%. This may well ring alarm bells at the Bank, which keeps a close eye on this measure.

“We’re still expecting inflation to drop back later this year, especially after April when last year’s energy price hike drops out of the figures, so while this is a surprise, it’s not a horrible shock. The descent was always going to be bumpy, it’s just that this particular bump feels larger and more painful than had been expected.”

The latest inflation data also comes as the Monetary Policy Committee at the Bank of England (BoE) is due to meet this week to make its next decision on interest rates, with several experts expecting another base rate increase beyond its current 4%.

“Following a series of chunky interest rate rises to the current 4% earlier this month, the BoE has little choice but to keep ratcheting up rates,” said chief investment analyst at Charles Stanley, Rob Morgan.

“Were it not for this hot inflation reading, the next interest rate decision, which takes place tomorrow, would have been finely balanced. The extra uncertainty caused by concerns over the health of some banks on both sides of the Atlantic, and the tighter conditions this implies, gives reason to pause. Now the likelihood is that rates will move up further, albeit at the slower pace of 0.25%.”

Technical director at Canada Life, Andrew Tully, added: “The BoE is poised to raise the base rate by a further 25 basis points on Thursday in a further attempt to cool inflation. Markets expect this to signal a pause in its hiking cycle, although future rises are possible dependent on the available data, with our economists not expecting any loosening until next year.

“With limited tools available, inflation remains stubbornly high, with forecasts suggesting a record fall in living standards over the next two years. This will make for unpalatable reading and offer little comfort for households on fixed incomes, despite the 10.1% triple lock rise in state pension due to kick in from 6 April.”

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