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

Surprise increase makes hike more likely, but economy is perilously close to recession

• Live coverage: Inflation jumps as cost of living crisis intensifies
• UK inflation rate in surprise rise to 10.4%
• Inflation calculator: find out how much price rises affect you

For millions of households, there had been hope that the worst of Britain’s cost of living crisis was behind us. But last month’s unexpected increase for inflation – reversing three months of progress – is as a painful reminder the squeeze is far from over.

February’s surprise increase will complicate matters for the Bank of England in particular. Financial markets had been betting over recent days that the worst banking crisis since 2008 could tempt Threadneedle Street to hold back from further interest rate rises. Before its next rate decision on Thursday, a further rise in borrowing costs is increasingly likely.