20000322

British inflation edges up in February

LONDON: Inflation in Britain edged higher in February, but remained below the Bank of England's 2.5 percent target for the 11th month in a row, official data showed on Tuesday.

The Office for National Statistics said that prices excluding mortgage payments rose 0.4 percent on the month to stand 2.2 percent higher in the year to February, up from 2.1 percent in the previous month.

The data highlight the dilemma faced by Chancellor of the Exchequer Gordon Brown, who publishes his annual budget later in the day.

Brown has been under pressure to relax his tight grip on spending, but he knows that any large giveaway budget could provoke higher inflation and drive interest rates up further.

The all-items retail price index was also up 0.5 percent in February to give an annual rate of 2.3 percent, compared with 2.0 percent in January.

The ONS said the largest upward effect on the index came from housing costs, as rising mortgage payments reflected recent rate rises by the Bank of England.

Looking ahead to next month, the ONS said any tax changes announced in Tuesday's budget will not have any bearing on the RPI index until April.

Financial markets showed little reaction to the data. -Reuters