UK inflation drops to 3.4 per cent as food pressures ease for cash-strapped households

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UK inflation fell again by greater than anticipated final month to the bottom stage in additional than two years as the expansion in food costs eased for cash-strapped households, official figures have proven.

The Office for National Statistics (ONS) stated that Consumer Prices Index inflation stood at 3.4 per cent in February – down from 4 per cent in January and the bottom stage since September 2021.

Most economists had been anticipating inflation at 3.5 per cent final month.

Inflation is now nearer in direction of the Bank of England’s 2% goal and comes forward of the newest rate of interest choice on Thursday.

Policymakers are extensively anticipated to hold charges on maintain at 5.25%, however the steep fall within the CPI is probably going to reinforce expectations that the Bank is shifting nearer to reducing charges later this yr.

Grant Fitzner, chief economist on the ONS, stated: “Inflation eased in February to its lowest rate for nearly two-and-a-half years.

“Food prices were the main driver of the fall, with prices almost unchanged this year compared with a large rise last year, while restaurant and cafe price rises also slowed.

“These falls were only partially offset by price rises at the pump and a further increase in rental costs.”

Paula Bejarano Carbo, economist on the National Institute for Economic Research, stated: “Annual CPI inflation was 3.4 per cent in February, falling from 4.0 per cent in January, driven by downward contributions from food and alcoholic beverages.

“This figure represents the lowest annual CPI inflation figure since September 2021 and possibly signals that the MPC can start to cut interest rates in the coming months – though we don’t expect any change at tomorrow’s meeting.”

Dr George Dibb, affiliate director for financial coverage at IPPR, stated: “Today’s news that inflation is falling is welcome, but it doesn’t mean prices are falling – just that they are rising less fast.

“The details of where prices are still rising the fastest also show we are entering a new phase of the inflationary period with food prices and restaurants making the largest downward contribution.

“The Bank of England’s high interest rates continue to cause pain in the economy. Indicators are heading in the right direction, with goods inflation, services inflation and ‘core’ inflation all falling this month, so we want to see interest rates come down.

“Alongside this, government must also make a shift away from the tax-cuts-at-all-costs strategy towards the much-needed prioritisation of investment into public services.”

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