UK Inflation Cools
UK CPI has fallen to the lowest level since September 2021 as easing prices for food, hotels and restaurants helped offset an increase in fuel prices and household services. The Office for National Statistics (ONS) said CPI dropped to 3.4% in February, 0.1% below the market consensus and the 4% recorded previously. Core inflation, so excluding volatile food, energy, alcohol, and tobacco prices, came in at 4.5%yoy, also 0.1% below estimates, and the previous reading of 4.1%.
Following the release, Grant Fitzner, chief economist at the ONS, said: “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”.
However, the drop in inflation is unlikely to have a material impact on the Old Lady’s rate decision tomorrow. The market was already overwhelmingly looking for the BoE to hold rates at 5.25% for a fifth straight meeting. The central bank is likely to stick to the script, acknowledging the possibility that the of the next move could be lower, while remaining vague about the timing.
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