UK inflation jumps to 10.4% as cost of living crisis intensifies – business live

LIVE – Updated at 19:59

US central bankers must decide whether to push on with monetary tightening, or pause rate hikes amid banking turmoil.

Stock market reacts to Fed interest rate hike

After the Federal Reserve announced a quarter-point interest rate increase today, the stock market is teetering slightly down. The Fed is putting interest rates at 4.75& to 5%, with a new targeted rate of 5% by the end of the year.

Investors were anticipating the quarter-point hike, which comes at a critical time for the Fed as it tries to respond both to the banking crisis caused by the collapse of Silicon Valley Bank and historically high inflation, which stood at 6% in February.

In a press conference, Fed chair Jerome Powell took a softer-than-usual stance on future rate hikes, saying the Fed will be looking closely at the effects of this rate hike along with what is happening due to the banking crisis. Still, he implied the Fed could continue to raise rates if there is no improvement on inflation. The Fed’s goal is to bring inflation down to 2%.

Attention on the Fed will continue next week as Congress starts to hold hearings on the collapse of Silicon Valley Bank. Fed supervisors were aware of the bank’s issues since 2021.

We’ll be closing this blog for today. Thanks for reading.


Jerome Powell just wrapped up his press conference. He took on questions about Silicon Valley Bank (SVB) and today’s quarter-point interest rate increase. Here are some takeaways from the press conference:

  • The Fed was considering a pause in the rate hikes, but ultimately decided against it. Powell said that, until recent weeks, the Fed was on track to raise rates higher than it had expected given the stickiness of inflation. It seems the Fed took the effects of the banking crisis into consideration and ultimately softened the hike it was anticipating.

  • Powell would not say what the outlook for future interest rate increases is, but they could happen. “Financial conditions seemed to have tightened,” Powell said. “The question for us though is how significant that will be and what extent the duration of it be.” Essentially, the Fed is seeing the economy contract a bit after the SVB collapse. What impact that will have on inflation will ultimately be what determines future rate hikes.

  • SVB was an outlier in terms of its issues, but the Fed is not off the hook (yet) for what happened. Powell said SVB’s weaknesses are not broadly seen throughout the banking system and emphasized the bank’s specific mismanagement. But Powell noted that Fed supervisors were aware of issues in the bank and “nonetheless, this still happened”.

  • Powell was tight-lipped on questions about what the Fed could have done better and what it will do next time. He’s waiting for the Fed’s review to come out on 1 May.


At his press conference this afternoon, Federal Reserve chair Jerome Powell is speaking on what he sees happened with Silicon Valley Bank and the Fed’s handling of the bank’s regulation.

“At a basic level, Silicon Valley Bank management failed badly. The degree the bank very quickly exposed the bank to significant liquidity risk and interest rate risk, didn’t hedge that risk,” he said. SVB then experienced an unprecedented bank run.

“My only interest is to identify what went wrong here. How did this happen? What went wrong?” he said, adding that the Fed is undergoing a review of its handling of SVB. “It would be inappropriate for me at this stage to offer my views on what the answers might be.”

When asked whether people can feel confident that SVB’s weaknesses do not exist at other banks, Powell said: “These are not weaknesses that are broadly through the banking system. This was a bank that was an outlier in terms of both its percentage of uninsured deposits and in terms of its holdings of duration risk.

“Supervisors did get in there and they were on this issue, but nonetheless, this still happened. And so that’s really the nature of the review to discover that.”

Powell, when asked, said he anticipated an independent investigation outside of the Fed’s review.

“I welcome that, and it’s 100% certain there will be independent investigation and outside investigations,” Powell said.


US Federal Reserve chair Jerome Powell has started his press conference, his first since the collapse of Silicon Valley Bank. He started with prepared remarks, first addressing banks, saying that the banking system “is strong and resilient with strong capital liquidity”.

“In the past two weeks, serious difficulties at a small number of banks have emerged. History has shown that isolated banking problems left unaddressed can undermine confidence in healthy banks and threaten the ability of the banking system as a whole,” he said, adding that the Fed has worked with the Treasury department and the Federal Deposit Insurance Corporation to ensure stability in the sector.

“We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound,” he said.

Powell quickly pivoted to interest rates, which the Fed just increased by a quarter point. Nearly repeating what he told Congress two weeks ago word for word, Powell said: “My colleagues and I understand the hardship that high inflation is causing and we remain strongly committed to bringing inflation back down to our 2% goal.

“Price stability is the responsibility of the Federal Reserve. Without price stability, the economy does not work for anyone. In particular, without price stability, we will not achieve a sustained period of long, strong labor market conditions that benefit all.”

Powell cited the strong labor market and consumer spending as signs of stickiness in inflation. “Getting inflation back down to 2% has a long way to go and is likely to be bumpy.”


US Federal Reserve chair Jerome Powell said that the Fed was seriously considering pausing interest rate hikes after the collapse of Silicon Valley Bank.

“We did consider that in the days running up to the meeting,” he said. Ultimately, the Fed has raised interest rates by a quarter-point, likely a softer raise than what would have come without the banking crisis.

“Really before the recent events, we were clearly on track to continue with ongoing rate hikes. In fact, as of a couple of weeks ago, it looked like we needed to raise rates over the course of the year more than we’d expected,” he said.


As we await US Federal Reserve chair Jerome Powell’s press conference to start in a few minutes, economists on Twitter are honing in on a line in the Fed’s statement about the quarter-point interest rate increase: “The committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”

Essentially, the Fed thinks more interest rate hikes are needed. Exactly how many, and by how much, is still unclear, but today’s raise shows that while the central bank is paying attention to the banking crisis, it’s still adamant on getting inflation down.

Justin Wolfers, an economics professor at the University of Michigan, said on Twitter that the Fed is making no case for stability over getting inflation down.

Fed raises interest rates by a quarter point

The US Federal Reserve is raising interest rates by a quarter point, pushing rates to 4.75% to 5%, the highest rates since 2007.

The much-anticipated announcement comes amid the banking crisis that has appeared in the aftermath of Silicon Valley Bank’s collapse. With economic uncertainty, the Fed was under pressure to pause its interest rate increases given the volatility of the economy.

But Fed chair Jerome Powell has been hawkish on his goal to get inflation down to 2% (it stood at 6% in February). Powell is expected to speak at 2.30pm at a press conference, where he will likely expand on the rationale behind the interest rate increase and is expected to take questions from reporters.

In a statement, the Federal Open Market Committee, which sets interest rates, said: “Recent indicators point to modest growth in spending and production. Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated.”

“The US banking system is sound and resilient,” the committee noted. “The committee remains highly attentive to inflation risks.”


Even with today’s big announcement on interest rates, the US Federal Reserve – especially chair Jerome Powell – has attracted scrutiny over the last few weeks over the bank’s regulation of Silicon Valley Bank (SVB).

Powell is scheduled to hold a press conference today at 2.30pm ET where he will likely be asked questions about the Fed’s handling of SVB. Reports have said SVB was under Fed scrutiny, with a group of Fed supervisors in San Francisco issuing warnings about the company’s risky management. The bank was under supervisory review starting this past summer. Some question whether the Fed could have acted more aggressively.

Powell specifically has been on the receiving end of criticism, notably from senator Elizabeth Warren, who on Sunday said Powell “failed” as chair given his role in deregulating banks and hawkishly raising interest rates.

“Jerome Powell has said that all he wants to do is lighten regulation on the banks. I opposed him as chairman of the Federal Reserve Bank precisely for that reason,” she said. “I said he was a dangerous man to have in this position.”

Markets brace for Fed interest rate decision

Tension is mounting as the US Federal Reserve prepares for an extremely eagerly anticipated interest rate decision.

The Federal Open Market Committee will announce under in an hour’s time whether it has pressed on with its monetary tightening push by raising borrowing costs, or pressed pause on its rate hikes.

The Fed’s target interest rate is currently set to a range of 4.5 to 4.75%.

At 2pm New York time, or 6pm in the UK, we’ll learn what the FOMC have decided.

The Fed must weigh up two competing concerns. One is inflation – US consumer prices rose by 6% in February, compared with a year ago.

Related: US inflation slows to 6% annual rate amid looming banking crisis

The Fed’s preferred inflation measure, the personal consumption expenditures price index, rose 5.4% from a year earlier in January while core PCE was up 4.7%, sharply above its inflation target of 2%.

Earlier this month, Fed chair Jerome Powell told Congress that the central bank could increase the size of its interest rate hikes and raise borrowing costs to higher levels, due to inflationary pressures. That led the markets to anticipate a half-point rate increase at this month’s meeting.

On the other hand, the US banking sector is in the worst turmoil since the 2008 financial crisis. The Fed’s existing rate increases have hit bond prices, leading to the crisis at Silicon Valley Bank which took losses on securities it had bought at the peak of the market.

Related: Silicon Valley Bank: why did it collapse and is this the start of a banking crisis?

As Robert Reich, a former US secretary of labor, wrote this week:

Higher rates could imperil more banks, especially those that used depositors’ money to purchase long-term bonds when interest rates were lower, as did Silicon Valley Bank.

That means that raising interest rates could cause more runs on more banks. The financial system is already shaky.

The two objectives – fighting inflation by raising rates, and avoiding a bank run – are in direct conflict. As the old song goes: “Something’s got to give.” What will it be?

The sensible thing would be for the Fed to pause rate hikes long enough to let the financial system calm down. Besides, inflation is receding, albeit slowly. So there’s no reason to risk more financial tumult.

But will the Fed see it that way?

Related: To prevent more bank runs, the Fed should pause rate hikes | Robert Reich

My colleague Lauren Aratani will take the blog over, to cover all the action.


Hello and welcome to the business live blog. This is Lauren Aratani in New York taking over for Graeme Wearden.

Just over two weeks ago, US Federal Reserve chair Jerome Powell told Congress that he intends to increase interest rates, which currently stand at 4.5% to 4.75%.

Powell has been hawkish on the historic levels of inflation over the last year. Inflation in February was 6%, a sizable decrease from June’s 9.1%, but nowhere close to Powell’s goal of 2%. “We’re strongly committed to returning inflation to our 2% goal,” he told Congress.

But things have certainly changed since Powell sat before Congress. The global economy has been dramatically shaken by the fall of Silicon Valley Bank, whose risky decisions were proved ill-fated as interest rates continued to rise.

The US Federal Reserve is now set to make a key announcement this afternoon on whether it will raise interest rates, a move that could further shake global markets after two weeks of turmoil in the aftermath of Silicon Valley Bank’s collapse.

Some economists expect the central bank to increase rates by a quarter point – what would likely be a compromise from the half-point increase Powell was likely eyeing before the banking crisis. Others have argued that Powell should pause rate increase given the instability of the economy.

The uncertainty over how the central bank will act is seen in the stock market, which is currently unmoving as investors await the announcement, which will come at 2pm ET (6pm GMT).

Powell is also set to deliver remarks along with announcing any changes to the interest rate.

We’ll be covering the Fed’s announcement this afternoon live, so stay tuned for more updates.

A pre-Fed catchup

Here’s a catch-up of today’s main stories so far, as the financial markets brace for the US Federal Reserve’s interest rate decision in less than 90 minutes time.

The City of London is expecting the Bank of England to raise interest rates to 4.25% tomorrow, after a surprise jump in UK inflation last month.

A quarter-point hike at noon on Thursday is seen as a 92% chance, after inflation surged to 10.4% in February due to high energy costs, food and clothing.

But, some economists predict the BoE could leave interest rates on hold.

Related: UK inflation rate in surprise rise to 10.4% as salad crisis pushes up prices

Related: Why does the UK have highest inflation in G7 and is Brexit a factor?

Related: UK inflation: which goods and services have risen most in price?

Related: ‘Money is a constant worry and it’s infecting everything’: one family’s experience of the soaring UK cost of living

High inflation, and the problems in the banking sector, are creating a dilemma for central banks:

Related: UK inflation rise complicates Bank of England’s interest rate decision

Related: Decision on interest rate rise on knife-edge amid banking crisis fears

And in other news, Switzerland is reeling from the rescue of Credit Suisse by UBS last weekend:

Related: Switzerland’s national pride dealt heavy blow by the merger of its banking titans

Amazon workers in the UK are planning further strike action as they dismissed as “an insult” a 50p an hour increase to its minimum hourly pay for warehouse workers to £11.

Related: Amazon UK staff plan more strikes as they reject pay rise as an ‘insult’

The Swiss pharmaceutical firm Novartis has ditched plans for a large clinical trial in the UK, in a further blow to the government’s efforts to make Britain an attractive place for research and investment after Brexit.

Related: Novartis scraps cholesterol drug trial in blow to UK life sciences ambitions

The former chief executive of the housebuilder Persimmon – famous for landing one of the biggest bonuses in British corporate history – has set up a new venture with his wife.

Related: Ousted Persimmon boss sets up new venture with his wife

The boss of British Gas’s parent company has angered consumer groups by accepting a windfall £4.5m pay packet, including bonus payouts totalling £3.7m, despite an investigation into the treatment of vulnerable customers.

Related: Boss of British Gas owner sparks outrage with £4.5m pay packet

The International Monetary Fund has agreed a package of support for Ukraine worth $15.6bn (£12.8bn).

Related: IMF announces $15.6bn support package for Ukraine

More than 2 million people have been contacted by bailiffs during the cost of living crisis, according to Citizens Advice, with a majority of those who came into contact with a debt collector reporting they felt harassed or intimidated.

Related: Most of the 2m people in England and Wales contacted by bailiffs report intimidating behaviour

Nick Leeson, the former rogue trader who caused the collapse of Barings Bank 28 years ago, has joined a firm of corporate private investigators.

Related: Former ‘rogue trader’ Nick Leeson joins corporate private eye firm

And John Lewis may find it is fishing in an extremely small pool, if the retailer looks for like-minded investors….

Related: John Lewis may find that cuddly co-investors don’t exist | Nils Pratley


In the City, the FTSE 100 share index has shrugged off the jump in UK inflation last month.

The FTSE 100 has ended the day at a one-week closing high of 7,566 points, up 30.6 points or 0.4%.

That’s its third daily gain in a row, as the rescue of Credit Suisse last weekend calms the markets.

Grocery technology firm Ocado (+1.95%) topped the risers, followed by banking giant HSBC (+1.9%).

IMF announces $15.6bn support package for Ukraine

16:03 Anna Isaac

The International Monetary Fund, the global lender of last resort, has agreed a package of support for Ukraine of $15.6bn (£12.8bn).

The loan, the first the Washington-based lender will make to a country at war, could represent one of the biggest tranches of financial support for Ukraine so far. It still needs to be signed off by the IMF’s executive board, a process that should conclude within weeks.

War had taken a “horrific humanitarian toll” on Ukraine, said Gavin Gray, the IMF’s mission chief for the country, but it also “continues to have a devastating impact on the economy”.

Ukraine’s economic output – GDP – shrank by 30% last year and poverty levels have risen significantly. Pressure on public spending to support the economy and manage its war effort is considerable.

Gray said:

“The authorities have nevertheless managed to maintain macroeconomic and financial stability, thanks to substantial external support and skilful policymaking.”

Related: IMF announces $15.6bn support package for Ukraine


The pound would likely suffer a sharp sell-off if the Bank of England does not proceed with a 25bp hike in interest rates tomorrow, warns Matthew Ryan, head of market strategy at global financial services firm Ebury.

Ryan says:

“We expect the Bank of England to press ahead with a 25bp rate increase on Thursday, with the hotter-than-expected February UK inflation print effectively sealing the deal for another hike, in our view.

“For one, Britain is relatively isolated from the recent global banking troubles, and fears surrounding contagion have eased significantly in the past few days. Indeed, we think that the banking failures have been one-offs, driven by poor management decision making, rather than necessarily any systemic issues. Equity markets have rebounded, as have sterling and short-dated UK bond yields, indicating that investors are not unduly worried about the situation.

UK core inflation also remains sticky, and economic activity data has continued to hold up rather well, particularly on the labour market.


Asked about the UK’s productivity prospects, OBR chair Richard Hughes points out that all countries have seen a slowdown in productivity growth.

Since the financial crisis, the UK has been ‘quite successful’ in getting people into the labour force, boosting output that way, he says.

But…”we’ve been less successful in getting output per hour” to recover.


The budget does make a ‘meaningful impact’ on some of the economic challenges the UK faces, adds Richard Hughes.

The OBR chief points to attempts to lift labour participation side, which the watchdog thinks will lift the number of people in work in five years time by around 110,000.

However, that is against the 500,000 people lost from the workforce since the pandemic.

Hughes says:

So it by no means reverses that effect, but it makes a meaningful difference… to making up for some of the shortfall.


OBR chair Richard Hughes says we shouldn’t get “too preoccupied” about whether the UK falls into a technical recession (which the forecaster no longer expects).

A technical recession means GDP falling for two quarters in a row.

Even if that doesn’t happen, Hughes says the UK still faces “quite a tough economic outlook” because living standards are much lower (with a record fall expected).


Q: Are you confident that Rishi Sunak will hit his target of halving inflation by the end of the year?

There’s “a pretty high chance of that” happening, says the OBR’s David Miles. But he warns that “it could be blown of course, for sure”.

Miles points out that no-one predicted the surge in energy prices at the beginning of last year, which were the single biggest factor for inflation getting up to 10%.

As such, he won’t say that it’s “in the realms of near impossibility” that inflation is over 5% at the end of the year.


Q: How confident is the OBR in its forecast that inflation will drop to 2.9% by the end of the year?

Professor David Miles says this is a central forecast, so one can’t be “very confident” in nailing it.

And actually, even though this morning’s inflation reading was higher than forecast (at 10.4%), Miles suspects that the forecast for inflation at the end of this year could be slightly below 2.9% if the OBR calculated it today.

That’s because wholesale gas prices for the coming winter have fallen by 15% since the start of March, in a ‘dramatic way’, he says.

OBR flags ‘fantasy tax rises’

The Treasury Committee begin today’s hearing by asking if last week’s budget was a responsible one.

Richard Hughes, chair of the Office for Budget Responsibility, says it was responsible, in the sense that the chancellor was still on track to meet the target of having debt falling as a share of GDP in five year’s time.

But, Hughes cautions, Jeremy Hunt only has a 52% chance of meeting his fiscal rules – which is the lowest since the OBR was set up [the OBR said last week that the chancellor only has £6.5bn of headroom].

Hughes also warns that fantasy tax rises, such as the perennially-postponed rise in fuel duty, are being used as fiscal ‘sleights of hand’ to flatter the outlook. If fuel duty keeps being frozen, that would cost £4bn at the end of the forecast.

He also points to “ambitions” to cut taxes, such as making the new temporary capital allowance in the corporation tax system, permanent. That would cost £10bn, and completely wipe out the headroom to hit the fiscal rules.


Andy King, a member of the OBR’s Budget Responsibility committee, warns the Treasury committee that in a “very volatile environment”, the OBR will make larger forecast revisions from one budget to the next.

There is a habit that bad news is absorbed into higher debt levels, while chancellor will tend to spend the good news – and that means debt will ratchet up, he points out.

In economist speak, that doesn’t sound very responsible, King adds.

UK budget watchdog speaks to the Treasury Committee – watch live

Over in parliament, the Treasury Committee is about to begin questioning the Office for Budget Responsibility (OBR) about last week’s Spring Budget.

Richard Hughes, Chair of the OBR is there, along with Budget Responsibility Committee members Professor David Miles CBE and Andy King.

You may watch it live here:


The New York Stock Exchange. Photograph: Spencer Platt/Getty Images

© Provided by The Guardian
The New York Stock Exchange. Photograph: Spencer Platt/Getty Images

There’s a nervy calm on Wall Street today, as trader await the Federal Reserve’s interest rate decision in four hour’s time.

The main indices are all slightly lower in early trading:

  • Dow Jones industrial average: down 11 points at 32,548, down 0.036%

  • S&P 500 index: down 1.7 points at 4,001, down 0.043%

  • Nasdaq Composite: down 9 points at 11,851, down 0.074%.

Daniel Takieddine, CEO for MENA at BDSwiss, says:

The Federal Reserve is expected to reveal its decision relating to interest rates later today. The uncertainty over the outcome continues to be an important issue for investors. A higher probability of seeing a 25 basis point hike is priced in market prices but a pause is also plausible due to the banking sector’s woes.

At the same time, the higher-than-expected inflation figures in the UK broke the current downtrend and could push the Bank of England into a tighter monetary policy direction. The decision could impact the stock market and the pound where investors have been uneasy with the slew of events of the last few days.


The UK labour market is likely to keep suffering from a shortage of workers, ratings agency Fitch predicts today – which could help push up wages.

In a new report, Fitch say that there has been a decline in the UK labour force since the start of the pandemic, largely due to an exodus of older workers who on the whole have little incentive to return to work.

Immigration may help to plug some of the gap, but labour shortages are likely to remain, they predict.

The report says:

The UK’s labour force is still smaller than it was before the pandemic, in contrast to most other major advanced economies. Fitch estimates that had the UK’s labour force continued to grow at its 2015-2019 trend rate, it would be around 2.5% bigger than it is today, equivalent to almost 900,000 workers.


Downing Street has said Rishi Sunak remains confident he will fulfil his pledge of halving inflation this year.

Asked about the rise in official figures, the Prime Minister’s spokesman said:

“This illustrates reducing inflation is not something that is automatic, it’s not something we’re on a glidepath to do, it requires discipline and making difficult decisions – that’s why we want to stick with our plan to get inflation under control.”

The Bank of England has predicted that inflation will sharply by the end of this year, partly due to ‘base effects’ (when the data catches up with price rises a year previously).

Centrica CEO receives £4.5m pay packet

Chris O’Shea, the boss of Centrica, has picked up a near £4.5m pay packet for last year, a time when households were hit by soaring energy prices.

O’Shea received a £3.68m bonus for last year, plus a fixed salary of £806,000, Centrica’s annual report shows, suggesting he won’t be unduly worried by the rise in inflation today.

Centrica, which owns British Gas, tripled its annual profits to a record £3.3bn in 2022 after a price surge triggered by Russia’s halt on gas supplies to Europe.

O’Shea had refused to say last month whether he’d take his bonus or not, after it emerged that agents used by British Gas to install pre-payment meters had broken in to vulnerable customers’ homes.

Related: Centrica boss refuses to say if he will waive bonus after ‘obscene’ £3.3bn profit


There are still jitters in the US banking sector today.

Shares in First Republic, the troubled regional lender, are down 2.6% in premarket trading, a day after ralling 29% on hopes of a rescue deal brokered by JP Morgan’s Jamie Dimon.

First Republic has been struggling to remain viable following a flight of deposits.

Reuters reported last night that First Republic is looking at ways it can downsize if its attempts to raise new capital fail, while the Financial Times says the bank has hired investment bank Lazard to help it explore strategic options.


UK interest rates are seen hitting 4.5% by August, up from 4% today.


A quarter-point increase in UK interest rates, to 4.25% tomorrow, is now a 97% likelihood according to the money markets.

That’s quite a swich, from a roughly 50:50 chance at the start of the week.


The cash savings deals currently on the market cannot beat inflation at 10.4%, according to analysis by

Two years ago, in March 2021, more than 300 savings deals, including regular savings accounts and Isas, could beat the rate of inflation at that time, which was significantly lower than it is now, it says.

Looking at the “best buys” currently available, the website highlighted an easy access savings account paying 3.35% from Chip, a notice account paying 3.50% from the Melton Building Society and a one-year fixed-rate bond paying an expected profit rate of 4.43% from Al Rayan Bank.

And looking at Isas, the website highlighted a 3.20% easy access deal from Cynergy Bank and a one-year fixed-rate Isa from Santander at 4.15%.


E-commerce giant Amazon is lifting its basic pay for UK workers from the start of Aptil.

Minimum starting pay for Amazon’s UK workers will be £11 an hour after the rise in April, up from £10.50. It employs more than 50,000 people across the country.

Many companies, including Pret a Manger and Costa Coffee, have announced pay rises in recent weeks as they otherwise risked falling foul of minimum wage rules, which rises to £10.42 per hour from the start of next month.

However the £10.50 that Amazon workers are currently paid would not have broken the new rules.

Amazon’s minimum starting pay is also based on location – some workers will get up to £12 per hour.

A spokesman said:

“We regularly review our pay to ensure we offer competitive wages, and we’re pleased to be announcing another increase for our UK teams.

“Over the past seven months our minimum pay has risen by 10%, and by more than 37% since 2018.

“We also work hard to provide great benefits, a positive work environment and excellent career opportunities.

“These are just some of the reasons people want to come and work at Amazon, whether it’s their first job, a seasonal role or an opportunity for them to advance their career.”

But in January, it announced plans to shut three of its 30-plus UK warehouses and seven small delivery sites, affecting more than 1,300 jobs.

Related: Amazon to shut three UK warehouses, putting 1,300 jobs at risk


UK manufacturers were hit by shrinking order books and falling output over the last quarter, a new healthcheck of the sector shows.

The CBI’s industrial trends report, just released, shows that order books were the weakest since February 2021, while production output fell.

The CBI’s gauge of expected selling prices fell to +25 in March, the lowest since March 2021 and down from +40 in February but still strong in historical terms.

Anna Leach, deputy chief economist at the CBI, explains:

“Falling output and softer order books highlight the challenging demand environment for UK manufacturing.

“Together with some easing of input costs, this seems to be feeding through to a marked weakening in selling price expectations for the next quarter.

Bank of England rate expectations

February’s unexpected acceleration in inflation complicates the Bank of England’s decision on interest rates this week, says Kallum Pickering of Berenberg Bank.

Pickering says tomorrow’s decision is “probably the most finely balanced decision in living memory,” (although the money markets indicate a quarter-point hike is likely).

The decision will hinge on whether policymakers believe the backward looking inflation surprise is likely to be the start of a trend or whether it is a one-off linked to normal monthly volatility.

Furthermore, policymakers will need to judge whether a likely period of liquidity hoarding and cautious lending behaviour by banks de facto does the BoE’s job for it – at least for a while.

As the BoE is likely at or close to the end of its rate hike cycle, as signalled in February by its shift to data-dependant mode, this is probably the most finely balanced decision in living memory.

Benjamin Trevis, economist at the Centre for Economics and Business Research, says the rise in core inflation to 6.2% presents “a key challenge” to the Bank of England’s efforts to combat inflation.

Trevis says:

Moreover, fast-moving developments surrounding recent banking trouble provide another challenge to the BoE’s decision tomorrow, following the collapse of Silicon Valley Bank and the takeover of Credit Suisse, which could lead to the abandoning of an expected rate rise due to concerns over stability in the financial system. In turn, this could leave price pressure higher than previously expected this year.

Considering the surprise uptick in the February inflation data and especially the worrying trend in core price pressures, Cebr expects a split Monetary Policy Committee decision resulting in a 25 basis point rise tomorrow at noon.”

But Ellie Henderson of Investec predicts that Bank rate will be held this month at 4.00% as the Monetary Policy Committee assesses the situation.

If the current banking turmoil proves not to be systemic as we expect, we envisage that this will be followed by a final 25bp hike in May.

Despite today’s disappointing release, we still maintain that inflation is on its way to the 2.0% target, helped by falling energy costs. Indeed, the latest estimates by our Utilities team now put the Ofgem price cap at below £2,000 for both Q3 and Q4, helping weigh on inflation further.

However, today’s stronger-than-expected inflation data certainly does raise the heat on the MPC to opt for a further 25bp hike tomorrow. We certainly wouldn’t rule it out.

While ING’s Developed Markets Economist James Smith predicts a quarter-point hike tomorrow:

A day before the Bank of England announces its latest decision, it is faced with an unwelcome resurgence in UK core inflation. Core CPI is back up at 6.2% (from 5.8% in January), and more importantly shows that the surprise dip in services CPI last month was a temporary one.

We’re still narrowly expecting a 25bp hike on Thursday, and we think the BoE will take a leaf out of the European Central Bank’s book and reiterate that it has the tools available if needed to tackle financial stability, thereby allowing monetary policy to focus on inflation-fighting. This was the mantra it adopted last October/November during the mini-budget and LDI pensions fallout in UK markets.

BP North Sea oil rig workers to strike for higher pay

10:09 Jillian Ambrose

Oil rig workers on BP’s North Sea platforms will join a “tsunami” of strike action across the UK Continental Shelf as workers demand better pay in the wake of bumper profits for fossil fuel companies.

Trade union Unite said 90 offshore workers employed by oil services company Petrofac to work on BP-owned installations have voted to join around 1,400 workers, across five rig-servicing companies, who plan to strike between late March and early June which could impact the North Sea’s oil and gas production.

Sharon Graham, Unite’s general secretary, said:

“Unite has warned of a tsunami of industrial unrest in the offshore sector due to the corporate greed of oil and gas operators and we will back our members all the way in their fight for good jobs, pay and conditions in the offshore sector.”

The latest round of industrial action will impact BP’s rigs on the Andrew, Clair and Clair Ridge fields as well as the The Eastern Trough Area Project and the Glen Lyon floating production, storage and offloading (FPSO) facility.

A spokesperson for BP said the company will continue to liaise with Petrofac, and added that safety was the top priority in its operations.

Meanwhile, strike action at a string of hydro power plants owned by FTSE energy giant Drax – which has reported bumper profits through the energy crisis – has been called off after Unite members voted to accept an 8% wage deal plus a £1,500 cash sum.

UK tenants hit by rising rents

The private rental prices paid by tenants in the UK increased by 4.7% in the 12 months to February 2023, new figures show.

That’s the largest annual percentage change since the data series began in January 2016, the Office for National Statistics reports.

The ONS says:

  • Annual private rental prices increased by 4.5% in England, 4.2% in Wales and 4.9% in Scotland in the 12 months to February 2023.

  • Within England, the East Midlands saw the highest annual percentage change in private rental prices in the 12 months to February 2023 (4.9%), while the West Midlands saw the lowest (4.0%).

  • London’s annual percentage change in private rental prices was 4.6% in the 12 months to February 2023.

Related: UK renters can’t afford their mouldy, exorbitant homes – now they can’t afford to complain either | Elle Hunt

The return of many workers to the office as pandemic restrictions end may be contributing to higher rents. The ONS says:

The annual percentage change in rents slowed in early 2021, which was driven by the slowdown, and later reduction, of London rental prices. This may have reflected lower demand in London because of the coronavirus (COVID-19) pandemic.

For example, remote working meant that workers no longer needed to live close to offices, and housing preferences changed.


Inflation in UK house prices has slowed, new figures from the Office for National Statistics show.

UK house prices fell by 0.6% in January, the ONS says, following a 0.4% drop in December.

This pulled the average UK house price down to £290,000 in January, which was £17,000 or 6.3% higher than 12 months ago.

The housing market cooled at the end of last year, after the disastrous mini-budget drove up mortgage rates.

Full story: UK inflation rate in surprise rise to 10.4% as salad crisis pushes up prices

09:35 Phillip Inman

UK inflation unexpectedly jumped up in February to close to its highest level in 40 years, driven by rises in the cost of drinks, women’s clothes and fresh food as salad items ran short, my colleague Phillip Inman writes.

The Office for National Statistics (ONS) said annual inflation as measured by the consumer prices index stood at 10.4%, confounding City forecasts for a modest fall to 9.9%.

The latest figures are likely to add to pressure on the Bank of England to raise interest rates on Thursday, despite growing fears over the unfolding crisis of confidence in the global banking system after the failure of Silicon Valley Bank in the US earlier this month and the weekend rescue of the Swiss lender Credit Suisse.

Inflation had fallen for three consecutive months prior to February, cooling from a peak of 11.1% in October to reach 10.1% in January before last month’s unexpected reverse.

The ONS blamed a sharp increase in the cost of fresh food and non-alcoholic drinks [up 18% over the year], the rising price of restaurant meals and a surge in the price tag on women’s clothes for reversal in a recent decline in inflation.

The salad crisis, which resulted in empty shelves once occupied by tomatoes, peppers and cucumbers, was highlighted by the ONS as the driving force behind the rise in fresh food costs.

It said:

“The largest upward effect came from vegetables, where prices rose in the month to February 2023 by more than a year earlier.

There have been media reports of shortages of salad produce and other vegetables, reportedly because of bad weather in southern Europe and Africa, and the impact of higher electricity prices on produce grown out of season in greenhouses in the UK and northern Europe.”

Related: UK inflation rate in surprise rise to 10.4% as salad crisis pushes up prices


Prices of staple foods surged over the last year, today’s UK inflation report shows.

While overall food prices were 18.3% higher than a year ago, that includes a 20.8% rise in bread prices, and a 28.6% surge in flour and other cereals.

Pasta and couscous cost 25.3% more than in February 2022.

Meat was 16.3% more expensive, fish prices jumped 15.7%, while ‘milk, cheese and eggs’ were 30.8% pricier.

Fruit prices rose 7.7%, while vegetables were 18% more expensive .

Elsewhere in the aisles, chocolate was up 11.6% and crisps rose 16.1%. Ready meal prices were up 22.2%.


The UK is a worrying outlier among advanced economies in suffering a jump in inflation last month.

Prices are also rising faster in Britain than in the eurozone, or the United States.

Across the eurozone, annual inflation dipped to 8.5 % in February 2023, down from 8.6% in January 2023.

In the US, consumer prices rose by 6% per year in February, down from 6.4% in January.

Odds of UK interest rate rise tomorrow surge

The odds of a rise in UK interest rates tomorrow has jumped sharply, after inflation jumped to 10.4% in February.

The money markets are now indicating a 95% chance of a quarter-point rise tomorrow, with a small possibility of a larger, half-point increase in Bank Rate (which is currently 4%).

At the end of last week, when the banking crisis was raging, the markets indicated the Bank was evenly split beween a quarter-point increase, and leaving rates on hold.

But the sight of inflation roaring in double-digit levels is likely to spur some BoE policymakers to vote to hike borrowing costs again at this week’s meeting (decision due at noon tomorrow).

Related: Decision on interest rate rise on knife-edge amid banking crisis fears


The New Economics Foundation are urging the Bank of England to resist pressure to raise borrowing costs again.

Table: How rising prices pushed up inflation

The data underpinning inflation report shows clearly how prices have soared over the last year.

Energy bills, food prices, and higher costs in restaurants and hotels all helped to push the consumer prices index up by 10.4% per year in February.

Here’s a breakdown:

  • Food and non-alcoholic beverages: + 18%

  • Alcoholic beverages and tobacco: +5.7%

  • Clothing and footwear: +8.1%

  • Housing, water, electricity, gas and other fuels: +26.6%

  • Furniture, household equipment and maintenance: +8.7%

  • Health: +6.8%

  • Transport: +2.9%

  • Communication: +3.7%

  • Recreation and culture: +4%

  • Education: +3.2%

  • Restaurants and hotels: +12.1%

  • Miscellaneous goods and services: +6.6%

Introduction: UK inflation report and Fed decision in focus

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The cost of living squeeze is in focus on both sides of the Atlantic today.

In the UK, inflation is expected to fall when the latest consumer prices index data is released at 7am.

The annual CPI index is expected to have risen by around 9.9% in February, down from 10.1% in January. That would be the lowest reading since last August, and a welcome return to single-digit inflation.

However, falling inflation does not mean that prices are falling – simply that they are rising less quickly (compared to a year ago).

Yesterday, chancellor Jeremy Hunt warned the House of Lords Economic Affairs committee that inflation was “dangerously high”, at over 10% adding “we need to do everything we can to maintain our focus on bringing it down.”

Falling inflation would please the Bank of England, which will release its decision on UK interest rates at noon tomorrow.

Today, though, it’s the US central bank’s turn to set borrowing costs.

Before the banking crisis blew up this month, the US Federal Reserve had been expected to hike interest rates by a half of one percent, another large increase. But with three US banks having failed in the last few weeks, the Fed may be more cautious.

Economists broadly expect a quarter-point increase from the Fed tonight (the decision is 6pm UK time, or 2pm in New York). But they could surprise Wall Street by holding borrowing costs…

Naeem Aslam, chief investment officer at Zaye Capital Markets, explains:

Heading into the meeting, the Fed is expected to raise interest rates by 25 basis points, which is still much lower than when Jerome Powell, the Fed Chairman, delivered his statement to Congress a few weeks ago.

Traders began pricing in a 50 basis point interest rate rise for today’s meeting at the time. Yet, the crisis in US regional banks has caused traders to reconsider their views, and the broad belief today is that the Fed will take its foot off the gas pedal.

We’ll hear from Fed chair Powell tonight too, and gauge how concerned he is about the banking crisis, and the economy…

The agenda

  • 7am GMT: UK inflation report for February released

  • 7am GMT: UK PPI report of producer price inflation released

  • 9.30am GMT: UK house price index

  • 11am GMT: CBI industrial trends survey of UK manufacturing

  • 2.15pm GMT: UK Treasury committee to quiz the independent Office for Budget Responsibility (OBR) on the budget

  • 6pm GMT: Federal Reserve decision on US interest rates

  • 6.30pm GMT: Fed chief Jerome Powell holds press conference


While CPI rose to 10.4% last month, the Retail Prices Index (another measure of inflation often used in pay negotiations) accelerated to 13.8% in February, from 13.4% in January.

TUC general secretary Paul Nowak says households need more help:

“Families are still under massive pressure from the rising cost of living, with food prices rising especially fast. But they got next to no help from last week’s budget.

“We need a comprehensive plan to get wages rising across the economy, and to boost social security. That’s how we build an economy that rewards work not wealth.”


The surge in inflation last month mean that UK real wages are still falling.

Total pay (including bonuses) rose by 5.7% per year in the year to January, while regular pay (excluding bonuses) was 6.5%.

So with inflation rising to 10.4%, workers’ pay packets are failing to keep pace with the rising cost of living.

James Smith, research director at the Resolution Foundation, warns that lower-income families are facing the highest price pressures.

“Hospitality and food costs continue to drive up inflation. The latter means lower-income families are facing the greatest price pressures of all, with an effective inflation rate above 12 per cent.

“Significant falls in inflation are still on the cards in the coming months, with household energy costs set to start falling from July, and signs that pay growth has stalled.”

UK inflation: what the economists say

February’s inflation surprise should be a one-off, predicts Martin Beck, chief economic advisor to the EY ITEM Club.

Beck says:

“CPI inflation surprisingly increased in February, rising to 10.4% from 10.1% in January. Around half of the rise in the annual rate was due to higher prices in the restaurants and hotels category, with food and non-alcoholic drinks prices also showing a notable increase. This was more than enough to offset another fall in petrol prices. Meanwhile, core inflation rose to 6.2% from 5.8% last month.

“There’s still good reason to think that inflation will fall substantially this year, and that February’s pickup will prove be a one-off. On the back of recent falls in energy prices, the EY ITEM Club thinks the Energy Price Cap is likely to fall to around £2,100 from July, which would contribute to a large decline in the energy component of CPI inflation, from 3.2ppts to -0.4ppts in Q4 2023. This, together with the strong base effects that are likely to come into play for most major inflation components, should put downward pressure on headline inflation. The EY ITEM Club expects the CPI measure to fall to around 3% by the end of the year.

Alpesh Paleja, the CBI’s lead economist, said that “while inflation rose in February, the outlook for the months ahead is looking more benign”.

Paleja adds:

“But while we expect inflation to fall back over this year, the firmness in domestic price pressures is something that the Bank of England will be keeping a close eye on.

“And despite further falls over the coming months, this year will still be a high-inflation environment for both households and businesses.”

James Smith, developed markets economist at ING, says the Bank of England is facing an “unwelcome resurgence in UK core inflation”, a day before it announces its latest decision.

Smith explains:

Core CPI is back up at 6.2% (from 5.8% in January), and more importantly shows that the surprise dip in services CPI last month was a temporary one.

Policymakers have signalled this is an area they’re paying particular attention to, not least because service-sector inflation tends to be more ‘persistent’ (that is, trends tend to be more long-lasting than for goods) and less volatile. Inflation in hospitality is proving particularly sticky.

The caveat here is that the Bank has indicated it is paying less attention to any one single indicator, and is focused more on a broader definition of “inflation persistence” and price-setting behaviour. And in general, the data has been encouraging over the past month or so. The Bank’s own Decision Maker Panel survey of businesses points to less aggressive price and wage rises in the pipeline, and the official wage data finally appears to be gradually easing.

Kitty Ussher, Chief Economist at the Institute of Directors, says the Bank of England’s job is ‘not yet done’:

“February’s CPI inflation rate is higher than expected, driven predominantly by high monthly price rises in food, hospitality and clothing. Food price inflation is now running at 18%, up from 16.7% in January, not helped by a shortage of some salad and vegetable items in recent weeks. Clothing prices often rise in February as fresh stock is brought in following the new year sales, but this year the change was particularly steep. Cafes and restaurants meanwhile have been hit by the triple whammy of higher wage, energy and food costs forcing a rethink of their pricing strategies.

“In recent days some have suggested that the febrile environment in the banking sector should give central banks pause for thought before raising rates further. Today’s data suggests the opposite; the Bank of England’s job is not yet done.”


Prices at hotels and restaurants jumped at the fastest rate since the summer of 1991 in February.

The annual inflation rate for restaurants and hotels rose to 12.1%, up from 10.8% in January.

That, the ONS says, is the highest rate since July 1991.

Food price inflation at 45-year high of 18% amid vegetable crisis

UK food and non-alcoholic drinks prices rose at the fastest rate in 45 years, the inflation report shows, driving up the cost of living.

Food and non-alcoholic drink inflation jumped to 18.2% in the year to February 2023, up from 16.8% in January, the ONS says.

Data modelling suggests the rate would have last been higher in August 1977, when it was estimated to be 21.9%.

A graph showing UK inflation Photograph: ONS

© Provided by The Guardian
A graph showing UK inflation Photograph: ONS

Vegetable prices rose by 18% in the year to February 2023, the highest rate since February 2009.

The shortages of some fruit and vegetables in the shops last month may have driven up prices.

The ONS says:

The largest upward effect came from vegetables, where prices rose in the month to February 2023 by more than a year earlier.

There have been media reports of shortages of salad produce and other vegetables, reportedly because of bad weather in southern Europe and Africa, and the impact of higher electricity prices on produce grown out of season in greenhouses in the UK and northern Europe.

The annual inflation rates for bread and cereals, chocolate and confectionery, other food products (principally ready-meals and sauces) and hot beverages were each the highest since at least 2008.


February’s inflation figure defies the recent downtrend with price pressures picking up again, returning to a near 40-year high, says Victoria Scholar, head of investment at Interactive Investor.

She adds:

This is likely to embolden the Bank of England to continue pursuing its rate hiking path despite the potentially deflationary impact of the turmoil in the banking sector.

No doubt the Monetary Policy Meeting will be keeping a close eye on the Fed’s rate decision tonight.

The pound caught a bid after the inflation data, jumping by a third of one percent against the greenback on anticipation of more hawkish monetary policy from the Bank of England.”


Shadow chancellor Rachel Reeves says:

“The reality is that under this Tory Government, families are feeling worse off and nothing is working better than it did 13 years ago.

“The cost-of-living crisis is still biting hard and taxes are rising, yet the Government chose to use the Budget to hand a £1 billion bung to the top 1%.

“Labour will stand with working people and with our mission to secure the highest sustained growth in the G7, make families across every part of our country feel better off.”

Pound jumps after inflation surprise

Sterling is rallying on the foreign exchange markets, after inflation jumped unexpectedly to 10.4% in February.

The pound has gained half a cent against the US dollar today to $1.226, and almost half a eurocent against the single currency to €1.139.

Traders will be calculating that the Bank of England is more likely to raise interest rates higher, as soaring inflation turns up the heat on the central bank.

Alberto Gallo, CIO of Andromeda Capital Management, warns that the Bank of England appears to be stumbling in the fight against inflation.


Suren Thiru, economics director at ICAEW (the Institute of Chartered Accountants in England and Wales) is urging the Bank of England to resist raising interest rates tomorrow.

Thiru argues that inflation will drop this month, as we catch up with the jump in prices in March 2022 after the full-scale invasion of Ukraine:

“This surprising rise in inflation highlights the continued crisis facing households and the damaging squeeze on firms’ ability to invest and operate at full capacity.

Inflation should resume its downward trajectory in March, when the strong base effect from the comparison to March 2022 – when Russia’s invasion of Ukraine sent fuel prices skyrocketing – is expected to lower the headline rate.

While inflation remains a key risk, we would caution the Monetary Policy Committee against raising interest rates this week given the fragility in financial markets.

Pushing ahead with raising rates in the current climate would risk further market turbulence and weaken our economic prospects.”

We’ll find out the Bank’s decision at noon tomorrow…

Core inflation rises to 6.2%

Core inflation, which strips out food, energy, alcohol and tobacco, rose last month too – which will not please the Bank of England.

Core CPI rose to 6.2% in February, up from 5.8% in January, a sign that inflationary pressures are building in the economy.

Rising clothing prices pushed up inflation

Increased prices for womens clothing also pushed up UK inflation last month, with prices rising more in February than a year ago.

Prices of clothing and footwear rose, overall, by 8.0% in the year to February 2023, up from 6.2% in the year to January 2023

Prices usually rise between January and February as new stock starts to enter the shops as retailers end their January sales – but the 2.5% rise in 2023 is the largest observed between January and February since 2012.

The ONS says:

The upward effect on the change in the headline rate between January and February 2023 was principally from women’s clothing, where prices rose by more this year than a year ago.

Newsflash: UK inflation jumped to 10.4% in February

UK inflation has jumped unexpectedly, in a blow to households.

Consumer prices rose by 10.4% in the year to February, the Office for National Statistics reports, up from 10.1% in January.

The ONS says the largest upward contributions to inflation came from housing and household services (principally from electricity, gas, and other fuels), and food and non-alcoholic beverages.

Economists had forecast a drop to 9.9%, so this is a surprise to the City.

This leaves inflation sharply higher than the Bank of England’s target of 2% – giving policymakers something to ponder before they set UK interest rates tomorrow.


Here’s ONS chief economist Grant Fitzner on the surprise rise in inflation last month:

“Inflation ticked up in February, mainly driven by rising alcohol prices in pubs and restaurants following discounting in January.

“Food and non-alcoholic drink prices rose to their highest rate in over 45 years with particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing.

“These were partially offset by falls in the cost of motor fuel, where the annual inflation rate has eased for seven consecutive months.”

First rise in UK inflation in four months

This is the first rise in UK inflation in four months, and pushes CPI towards the 41-year high of 11.1% set in October 2022.

UK inflation to February 2023 Photograph: ONS

© Provided by The Guardian
UK inflation to February 2023 Photograph: ONS


On a monthly basis, consumer prices rose by 1.1% in February 2023, compared with a rise of 0.8% in February 2022.

That was driven by higher prices in restaurants and cafes, and for food, and clothing.


Adam Cole of RBC Capital Markets predicts annual UK inflation will have eased to 9.8% in February, as we catch up with price rises last spring.

Cole explains:

From March, the combination of last year’s lifting of Covid restrictions and large price increases for energy and food mean that base effects begin to really dominate.


Mohamed El-Erian, economic adviser to Allianz, predicts that UK inflation is going to continue to come down.

Speaking to Radio 4’s Today programme, El-Erian predicts:

So we’re going to say goodbye to the high of over 11%.

We’re going to come into single digit either today or next month and we’re going to head all the way down to 4%, and then get stuck there.