The UK's yearly inflation rate decreased more than anticipated in February, according to official information released on Wednesday, leading to speculation about a potential interest rate cut by the Bank of England in the coming year.
Inflation hit 3.4 percent last month, marking its lowest level since September 2021, following a peak of 4.0 percent in January, as reported by the Office for National Statistics.
A Bloomberg survey had projected a 3.5 percent increase in consumer prices for February.
Inflation continues to exceed the Bank of England's target of two percent.
The Bank of England is widely anticipated to maintain its primary interest rate during an upcoming announcement on Thursday, following its most recent regular monetary policy meeting.
However, analysts anticipate a potential rate cut as early as June.
Grant Fitzner, chief economist at the ONS, stated that “food prices were the main factor behind the decrease, with prices showing minimal change this year compared to a substantial increase last year”.
According to the ONS, the Consumer Price Index (CPI) rose by 0.6 percent last month, compared to a 1.1 percent rise in February 2023.
Jeremy Hunt, the finance minister, expressed his approval of the news.
He mentioned in a statement, “Inflation has not only significantly decreased but is expected to reach the two-percent target in the coming months.
This lays the groundwork for improved economic circumstances that could facilitate further advancements toward our goal of enhancing growth.
In anticipation of an upcoming general election, where the Conservative party is projected to lose power to the main opposition Labour, Hunt advised against “increasing borrowing or reducing funding for public services” in order to finance tax reductions.
AFP
