Tuesday, the Office for National Statistics said UK's annual inflation accelerated to 3.2% in February from 3% in January. Economists had expected consumer price inflation to slow to 2.6%. Month-on-month, consumer prices were up 0.9%, faster than a 0.3% rise expected by economists.

The largest upward contribution to the annual inflation came from food and non-alcoholic beverages. At the same time, the only downward contribution to the change came from housing and household services.

The ONS said the retail price index rose 0.6% in February from the prior month, while economists expected a 0.1% drop.

On a yearly basis, retail prices remained flat after rising 0.1% in January. Economists were looking for an annual fall of 0.7% in February. The retail price index, excluding mortgage interest payments climbed 2.5%, slightly faster than the 2.4% increase seen in January.

As the inflation remained more than one percentage point above the target, Bank of England Governor, Mervyn King wrote a further open letter to the Chancellor of the Exchequer. King expects sharp decline in CPI inflation since its peak in September to resume in the coming months.

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