Inflation edges up from two-year low as food and alcohol prices rise

The UK inflation rate edged up from two-year lows last month as food and alcohol prices rose.

The Consumer Price Index (CPI) 12-month rate was 1.9 per cent in February, up from 1.8 per cent in January, according to the Office for National Statistics (ONS).

Read more: UK inflation falls close to a two-year low

Rising food, alcohol and tobacco prices pushed inflation upward, but was offset by clothing and footwear – the largest downward contributors.

"Inflation holding relatively steady, the highest levels of employment since 1971, and wages increasing at their fastest pace in over a decade gives a rosy shine to the UK's economic position," Zurich's head of retail platform strategy, Alistair Wilson, said.

But he said the welcome boost for households may be "short-lived" with Brexit uncertainty making the future movements of inflation unpredictable.

With the Bank of England's monetary policy committee (MPC) set to make a decision on interest rates tomorrow, EY Item Club economist Howard Archer said it was clear the committee would "sit tight."

He said: "Indeed there is a very real possibility the Bank of England will keep interest rates at the current level of 0.75 per cent through 2019."

Read more: Inflation remains steady in October, ONS data shows

He said with CPI below the two per cent target rate and a "muted" economy despite earnings growth and a tight labour market, the Bank had scope to adopt a "wait and see" approach on monetary policy.

Ruth Gregory, economist at Capital Economics, said inflation looked set to rise further over the next couple of months given a planned rise in the utility price cap in April and price pressures in the supply chain.