Inflation News

The rises to minimum wages announced today are still below the rate of inflation.

This means that someone earning the new rate will still be making less money in real terms because the prices of goods and services are rising more quickly.

The minimum wage increases are as follows:

• Adult minimum wage - 1.9% increase
• 18-20-year-old minimum wage - 1% increase
• 16-17-year-old minimum wage - 1.1% increase
• Apprentice minimum wage - 1.1% increase

And the current rate of inflation is:

• Consumer Prices Index (CPI) - 2.8% per year
• Retail Prices Index (RPI) - 3.2% per year

What is the CPI and how is inflation calculated?

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Labour's Shadow Treasury Minister has responded to today's inflation figures, saying that the government is "making things worse not better."

Cathy Jamieson MP said:

This government is making things worse not better. On top of rising food prices and soaring energy bills, millions will pay more next month as tax credits and child benefit are cut while millionaires pay less. The Budget must act to kickstart our flatlining economy and help people struggling with the rising cost of living right now. The tax cut for millionaires should be cancelled and people on middle and low incomes should be given a tax cut instead - for instance through a temporary VAT cut and by bringing back a lower 10p starting rate of tax.

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The biggest upward contribution to the new inflation rate of 2.8% has been increases in gas and electricity bills, as well as price changes for recreational goods, according to the Office for National Statistics.

Also contributing were prices for motor fuels and air transport.

The largest downward contributions came from small price increases for food and drinks.

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A spokesperson for the Treasury has commented on today's inflation data from the Office for National Statistics.

The spokesperson said: “Inflation is in line with market expectations and down by almost a half from its peak of 5.2 per cent.”

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Inflation has gone up a touch to 2.8% in February, from 2.7% in January. This rate of inflation is now the highest since May last year.

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The underlying rate of retail price index inflation fell to 3.2% in February from 3.3% in January, the ONS said.

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The headline rate of retail price index inflation fell to 3.2% in February, from 3.3% in January, the Office for National Statistics said.

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The rate of consumer price index inflation rose to 2.8% in February, from 2.7% in January, official figures showed today.

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The Office for National Statistics (ONS) will release inflation figures for February later this morning. The cost of living is expected to rise driven by the fall in value of the pound increasing the cost of imported goods.

Last month it remained unchanged at 2.7%.

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The Bank of England's remit should not change to include anything other than the 2% target of inflation, the outgoing Governor Sir Mervyn King has told ITV News.

In the second of two exclusive interviews with Sir Mervyn, he said: "I'm not sure that there is any call for a major change in the remit."

He added: "What‘s most important is that we commit ourselves again to a very clear target for inflation of 2%."

Read: The hopes and regrets of the Bank's outgoing Governor

Read: BoE Governor: Recovery in 'sight' for UK economy

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