BOE's King: Sharp inflation decline to resume in coming months Consumer prices across Britain jumped more than expected in February, fueled by rising prices for food and drink, recreation and transport, the Office for National Statistics reported Tuesday. The consumer-price index rose 0.9% in February, creating a 3.2% increase compared with the same month a year earlier. Expectations were for a 0.2% monthly rise and a 2.5% annual increase. Bank of England Gov. Mervyn King, in a letter to Chancellor of the Exchequer Alistair Darling, Britain's finance minister, said inflation has been exceedingly volatile in recent months but would likely resume its downtrend. "Despite the increase in CPI inflation in February, we believe that the sharp decline in CPI inflation since its peak in September is likely to resume in the coming months," King wrote. The Bank of England earlier this month implemented a program designed to expand the money supply, effectively creating new money and using it to purchase British government bonds, or gilts, and corporate debt. The plan is aimed at bringing down interest rates, stimulating spending and averting a deflationary spiral. See archived story. King was required to write an open letter to Darling to explain why annual inflation remains more than a full percentage point above the official target of 2%. The British pound rebounded sharply after the data and remains 1.1% higher versus the U.S. dollar at $1.4705 and 1.5% higher versus the euro at 92.17 pence.

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