More inflation to come?
Pretty grim set of economic stats on the eve of Chancellor Osborne's second Budget.
First, public borrowing was £11.8 billion in February, the highest borrowing for that month since records began and £2.3 billion higher than February last year. Tax revenues are more buoyant than expected but for a government committed to borrowing a lot less these figures show the heavy lifting hasn't even started.
Second, inflation as measured by the RPI, which is used as the basis of many a wage negotiation, rose to 5.5% last month from 5.1% in January. This is much more than expected. Even the more modest CPI, the government's preferred measure, rose to 4.4%.
At a time when most folks' pay is either static or falling in real terms, these inflation figures mean only one thing: a further squeeze on living standards, especially with January's rise in Vat and April's rise in National Insurance.
They also mean interest rates are more likely than ever to rise this year. The markets certainly think so: sterling jumped against the dollar this morning, trading at $1.6359 in the immediate aftermath of the data.
The markets also think there's more inflation to come: bonds fell, with the yield on the 10-year gilt rising 8 basis points to 3.61% as investors demanded higher yields to compensate for higher inflation.