UK inflation expectations raise possibility of Feb rate hike - BDO.

(From AFX Europe (Focus))

LONDON (AFX) - UK inflation expectations have shot to a two year high in the BDO Stoy Hayward Business Trends Index this month, raising the possibility of a February rate hike - the second this year.

The BDO Business Trends report, which pulls together all the UK's main business surveys, reveals one of the sharpest inflation index increases in any quarter in recent years (from 105.4 in October to 109.2 in January).

This implies Consumer Price Index inflation of 2.9 pct in the second quarter of 2007 and confirms that businesses expect inflationary pressures to remain in the medium term.

The sharp increase was led by …