What's going on?

Inflation’s got Britain breaking a sweat, with February’s numbers coming in hotter than expected.

What does this mean?

Bank of England (BoE) workers were probably trudging to the office after catching a glimpse of the latest UK inflation digits: turns out, prices jumped by 10.4% in February compared to last year, outdoing the 9.9% forecast and reversing the recent cooldown. And core inflation � which leaves out energy costs and all the stuff Brits dig (like food, tobacco, and booze) � climbed 6.2% (tweet this), also outstripping economists’ predictions. A closer look shows there really isn�t much to feel warm and fuzzy about: only the annual price hikes for furniture, transport, and recreational activities cooled down in February � everything else outpaced January’s numbers.

Why should I care?

Zooming out: Give me a break.
When the BoE said inflation would probably near its 2% target by the end of summer, most folks figured that meant the bank would soon hit pause on its rate-hiking moves � or even reverse them. But if scorching inflation digits keep coming, the bank’s going to have to toss its medium-term plans out the window and keep jacking up rates. And that could drag the specter of a nasty recession � which the UK seemed to be dodging � back into the spotlight.

For markets: No sure thing.
Sure, British inflation and the US�s mini-banking crisis � which has prompted calls for the Federal Reserve (the Fed) to halt rate hikes soon � should see the pound continuing its recent muscle-flexing against the dollar. That�ll ease at least some inflation pressure for the import-thirsty UK. But be wary of pinning too many hopes on the ever-changing foreign exchange markets: only six months ago, the pound was heading towards parity with the dollar in what seemed like a �one-way bet,� but now dollar weakness seems to be the consensus view. The lesson: these things are never as certain as they seem.