Inflation in the UK fell more than anticipated in February. The consumer price index dropped from 3% to 2,8%.
Office for National Statistics stated that the decrease was due to a drop in clothing and footwear prices. It said that small increases in the price of some products, such as alcohol drinks, had little effect.
However, the rate of inflation remains higher than Bank of England target of 2%.
Darren Jones, Treasury chief secretary, responded to these figures by saying: “Our mission is to kick-start growth and raise living standards for workers. That is why we protect their pay slips from higher tax.
“In an ever-changing world, our focus is to deliver economic stability and secure people’s financial security – we freeze fuel duty, protect the triple lock, and increase the national living wages by PS1,400 per year for full-time employees, while also going further and quicker to drive growth with our plan for changes.”
Analysts predict that Bank of England will cut interest rates by May to further reduce living costs.
The three main inflation measures all fell by 0.2 percentage point. CPI was 2.8% for the year ending February. CPIH (including owner-occupier house costs) was 3.7%. Retail prices index (RPI), which is often cited as a measure by trade unions (measure of retail prices), was 3.4%.
Lily Megson is the policy director of My Pension Expert. She says that many employees will feel “light relief” after a period of financial uncertainty.
After years of economic turmoil, any feeling of stability and a reduced cost of living would be welcome. She said that the impact of high inflation on the economy is still felt over time.
Rachel Reeves, the chancellor of the United Kingdom, will also announce today (26 March), her government’s Spring statement. She will confirm a number of welfare cuts including reductions to support for people with long-term conditions and disabilities.
Paul Nowak said that the plans of the TUC’s general secretary would play a key role in revitalizing growth.
“That is why the Bank should reduce interest rates at the beginning of next month and continue doing so throughout the entire year.
Lower interest rates will ease the burden on government, households and businesses. The lower interest rates will put more money into the pockets of working people to spend in our high streets and give firms more confidence to invest.
Sarah Coles of Hargreaves Lansdown’s personal finance department warned that the downward trend could reverse in January. “Like a pub-goer who has been over-refreshed after midnight, inflation is now stumbling in an uncertain direction, dropping from 3% down to 2.8%. The market was not expecting this change.
It’s expected that it will return to growth next month and continue to rise in April, once the price increases of AwfulApril kick in.
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