Consumer prices in Britain rose by 3.4% in annual terms after a 4.0% increase in January, the weakest rate of inflation since September 2021
British inflation slowed in February, keeping the Bank of England on track to start cutting interest rates in the months ahead and offering some better economic news to Prime Minister Rishi Sunak before an election expected later this year.
Food and prices at eateries were the biggest downward drags, offset by motor fuels, the Office for National Statistics said. “Today’s inflation numbers do not change our view ... that the MPC is likely to convey the message that it has an eye on easing policy rates this year, but the hurdle to do so has not yet been overcome,” Ellie Henderson, an economist with Investec, said.
Despite the moderation in price pressures, Britain still has the highest rate of headline inflation among the Group of Seven advanced economies. The BoE thinks inflation – which peaked above 11 per cent in October 2022 – will fall back to the central bank’s 2 per cent target in the coming months before picking up again slightly.
Finance minister Jeremy Hunt said the latest fall in inflation could help the government with its goal of abolishing social security taxes altogether. But any moves would be done only if the government could avoid increasing borrowing or cutting funding for public services.
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