Inflation edged up slightly last month after hitting a two-year low in January, according to the Office for National Statistics (ONS).
The Consumer Prices Index (CPI) 12-month rate was 1.9% in February 2019, up from 1.8% in January 2019.
The ONS’s alternative measure called CPIH, which includes housing costs, was 1.8% in February, unchanged from the previous month.
The statistics authority says that rising prices for food, alcohol and tobacco helped push inflation upwards, offset by the falling price of clothing and footwear.
In the main, the increase in prices for alcohol and tobacco came as a result of higher duties imposed by the government from the beginning of February.
There was good news for motorists though, with the price at the pumps falling by 0.5p per litre between January and February to 119.1p. Diesel fell by 0.2p to 129.3p.
The figure remains below the Bank of England’s 2% target and economists expect the Bank of England to hold off raising interest rates as a result.
Howard Archer, chief economic adviser at EY ITEM Club, says the Bank will “sit tight” on interest rates until there is greater clarity on the Brexit.
He says: “There is a very real possibility that the Bank of England will keep interest rates at the current level of 0.75% through 2019.
"The current weak state of the UK economy hardly calls for higher interest rates despite the tightness of the labour market and recent firmer earnings growth, while consumer price inflation at a below-target rate of 1.9% in February gives the Bank of England scope to adopt a ‘wait and see’ approach on monetary policy.”
Wage growth data released by the ONS on March 19 showed wages grew by 3.4%, well above the current level of inflation.
Kate Smith, head of pensions at Aegon, says: “Households will be hoping the increase in inflation and stabilisation of wage growth does not herald a reversal of the increasing wage growth and low inflationary environment that they have experienced over the last half year.
“Individuals need to think carefully about how to protect the spending power of their retirement savings, particularly if we see a continuation of the rise in inflation. The erosive effects of inflation can be very damaging and even in a period of low inflation, today’s money can dramatically reduce in spending power over the long-term.”
Separate figures the ONS show that annual UK house price growth slowed to 1.7% in January, the lowest since June 2013.
Annual growth was largely dragged down by falling prices in London, the South East and the East of England. This is the first time since June 2013 that house price growth has been lower than annual growth in both CPIH and average weekly earnings.
There are now 209 standard savings accounts that match or beat the CPI inflation rate of 1.9%.
The shortest term that offers an interest rate that matches the current rate of CPI inflation is just one year, with Al Rayan both paying 2.17% and Gatehouse Bank paying 2%.
To mitigate the damaging effects of inflation it is important for savers to choose the highest paying account.
If you leave your funds languishing in an easy access account paying 0.15%, a deposit of £50,000 would have fallen to just £45,852 in real terms over five years, assuming an inflation rate of 1.90%.
Tom Adams, head of research at savings advice site Savings Champion, says: “Many savers are languishing in savings accounts that are paying lower rates than inflation - particularly those held with the high street banks.
"But savers do not have to take this lying down and accept paltry rates - switching to mitigate the effect of inflation is far better than leaving the funds earning next to nothing and by taking advantage of best buy rates, they are reducing the effect of inflation on their hard-earned savings."