The ONS highlights that the price data used predates the current hostilities within the Middle East, which commenced on 28 February 2026.

Last week, the Bank of England unanimously voted to hold the base rate at 3.75%, which was widely expected.

Prior to the ongoing conflict in the Middle East, the BoE was expected to cut base rate by at least 0.25% but the institution is set to remain cautious throughout 2026.

During the meeting on 19 March, the MPC said: “Conflict in the Middle East has caused a significant increase in global energy and other commodity prices, which will affect households’ fuel and utility prices and have indirect effects via businesses’ costs.”

“Prior to this, there had been continued disinflation in domestic prices and wages. CPI inflation will be higher in the near term as a result of the new shock to the economy.”

The conflict has caused swap rates to rise, dragging up the cost of fixed-rate mortgages.

Commenting on the inflation figures, L&C Mortgages associate director David Hollingworth says: “The rate of inflation was expected to remain stable in February but today’s figures will be of little comfort to mortgage borrowers, who are already reeling from the impact of the conflict in March.”

“The sharp change in outlook for inflation as a result of rising oil and gas prices has already sent mortgage rates substantially higher than at the beginning of March. Markets are anticipating that interest rates will remain higher for longer and are now factoring in interest rate rises. That’s a far cry from only a few weeks ago where an expectation of further cuts was the consensus.”

“That swing is causing significant volatility and fixed rate mortgages continue to be priced higher by lenders. Those hikes keep on coming as many lenders enter their third or fourth round of product changes in the last two to three weeks.”

“That has seen a surge in borrowers rushing to lock in a rate before further increases take hold. Our figures show that the increase in the average of the best remortgage rates from the ten biggest lenders means that a £200k mortgage on a 2 year fixed rate will cost almost £85p.m. more now than at the beginning of the month.”

“With prices at the pump already higher, borrowers will also be nervous about the increase in energy costs expected in coming months. Today’s figures are therefore likely be viewed as the calm before the storm by homeowners.”

Meanwhile, Evelyn Partners chief investment strategist Daniel Casali comments: “This the inflation reading for February is already an outdated snapshot of UK price dynamics, given that it predates a sharp rise in global energy prices triggered by the escalation of conflict in the Middle East at the end of last month.”

“Since then, wholesale natural gas prices have surged by more than 70%, the Brent crude oil benchmark has risen by 36%, and unleaded petrol at the pump has increased by nearly 7%.”

“What we do learn today is that this mounting external pressure on inflation in the coming months is coming on the back of domestic inflation pressures that were already firming before that oil shock hit.”

Casali adds: “The Bank’s 19 March Monetary Policy Committee (MPC) communication acknowledges that monetary policy cannot offset global energy shocks. However, it also highlighted heightened concern over domestic second round effects and the risk that sustained higher energy prices could entrench broader inflationary pressures.”

“The statement concluded by noting that the MPC ‘stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term’ – indicating a clear leaning toward further tightening. This represents a notable shift away from the Bank’s earlier easing bias.”

“The BoE will also be concerned that inflation expectations become unanchored. In March, the latest Citi/YouGov survey showed inflation expectations for the next 12 months rising sharply to 5.4% from 3.3%, reaching their highest level since March 2023 and reversing much of the disinflationary progress seen in previous months.”

“With geopolitical shocks and strengthening domestic cost pressures, the inflation trajectory appears increasingly less benign. Rising interest rate expectations have already placed upward pressure on gilt yields. The 2 year gilt is trading at 4.6%, its highest level in nearly two years, and could well go higher.”