Helena Lyng Blak
9 weeks ago

UK inflation falls to the lowest point in two and a half years

The easing increases rate cut speculation.
Close up focus photos of new United kingdom Pound coin, among other British coins
wael alreweie / Shutterstock.com

Exceeding expectations, the UK inflation rate fell to 3.4% in February, a decrease of 0.6% from January’s inflation rate of 4%. According to The Guardian, the rate was projected to drop to 3.5%.

Data from the UK Office for National Statistics (ONS) show that the most significant downward contributions to the monthly change came from food, restaurants, and cafés. The 12-month rate for food and non-alcoholic beverages fell from 7% to 5% between January and February, while the rate for restaurants and hotels fell by 1.1% from 7.1% to 6%.

The general decrease in inflation was, however, partially offset by a rise in housing and household services. The annual rate was 2.5% in January but jumped to 2.9% in February. Both owner-occupiers’ housing (OOH) costs and annual rates for rentals were up.

Nevertheless, the overall fall in inflation is furthering speculation that the Bank of England (BoE) will cut interest rates in the summer.

Investors are furthermore predicting that inflation will continue to fall throughout the spring, bringing the UK within reach of its inflation target of 2%.

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