UPDATE: UK producer price inflation cools, but less than expected

Inflation in the UK came in hotter-than-expected in February, figures from the Office for National Statistics showed on Wednesday.

Meanwhile, data from the ONS also revealed that producer input price inflation cooled in February, though the rate came in higher than market expectations.

The consumer price index rose by 10.4% in February from a year before, accelerating from a 10.1% annual rise in January. Market consensus had expected UK inflation to cool to 9.8% in February, according to FXStreet.

The print remained below the recent peak of 11.1% in October, which was the highest annual inflation rate since 1981, according to the ONS.

On a monthly basis, UK consumer prices rose 1.1%, reversing a 0.6% decline in January. Markets had expected the monthly inflation rate to be just 0.6%.

The largest upward contributions to the monthly change came from restaurants and cafes, food, and clothing, the ONS said.

Core annual inflation - excluding energy, food, alcohol, and tobacco - picked up to 6.2% in February from 5.8% in January.

Markets had expected core inflation to remain unchanged.

Producer input prices cooled to 12.7% in February from a year before, down from 14.7% in January. Markets had expected the print to cool further to 10.8% in February.

Meanwhile, producer output prices decelerated to 12.1% from 13.5% in January from a year prior. This was slightly cooler than the slowdown to 12.5%, that had been expected.

Inputs of crude oil and petroleum products provided the largest downward contributions to the change in the annual rates of input and output inflation, respectively, the ONS said.

The annual rate of input price inflation has now been positive for 27 consecutive months, though it has been slowing for the last eight. Output price inflation has been positive for 26 consecutive months, and slowing for the last seven.

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