Analysis: Inflation statistics just got interesting again. The Valentine's day massacre was how Ulster Bank chief economist Pat McArdle described the latest numbers for February.

"Inflation surges in February, consumer spending on fire" is how they were described by Jim Power of Friends First. Yesterday's inflation numbers for February show the pace of price growth at its fastest in almost three years.

The 3.3 per cent rate is not in itself spectacular. Inflation averaged 5.6 per cent in 2000 and stayed above 4 per cent in 2001 and 2002. What is worrying analysts is the sudden and unexpected jump in the rate. From a respectable 2.5 per cent in December, inflation has shot up by 0.8 of a percentage point in just two months.

The Central Statistics Office (CSO) provides a helpful breakdown of the figures that helps to identify the two main culprits. Excluding energy products, it finds that inflation would have been just 2.3 per cent. Oil price increases dating from mid-summer last have pushed up the price of petrol, diesel and home heating oil. The year-on-year impact on inflation remains in the inflationary cycle and won't pass out of it until the summer.

Then there are recent interest rate hikes by the European Central Bank (ECB). If one excludes mortgage interest costs, the annual inflation rate is just 2.6 per cent.

So but for oil price increases and interest rate hikes, annual inflation would have been relatively normal. Barring a new Gulf war, the effect of oil price increases will leave the annual inflationary story by the summer.

The ECB has one more hike up its sleeve between now and then but its effect will have subsided by the end of the year. For these reasons, most analysts expect inflation to moderate to just under 3 per cent by the end of the year.

But as one of the most successful forecasters of inflation, Pat McArdle of Ulster Bank, has pointed out, analysts wrongly predicted that February's inflation rate would rest somewhere between 2.7 and 3.1 per cent.

Inflation is not just a passive phenomenon. It can defy static predictions by taking on a life of its own.

For a start, as they sit around the social partnership talks, trade unions would not be doing their job if they didn't factor yesterday's numbers into their latest wage demands, which in turn will act to generate more inflation.

There is another kind of dynamism in the economy. Yesterday's inflation numbers coincided with other worrying evidence of consumers rampaging through the high streets of Ireland and throwing wads of cash at retailers.

By increasing their borrowings, consumers pushed the value of retail sales up by 5.4 per cent in February compared to January. The annual rate of increase, 11 per cent, was the highest rate in over six years.