U.K. Inflation Lower Than Expected at 3.4% in February
In a positive turn of events, the U.K. inflation rate for February came in lower than expected at 3.4% year-on-year. The headline consumer price index rose by 0.6% month-on-month, with the largest downward contributions coming from food, restaurants, and cafes. However, there was upward pressure from housing and fuel prices.
Specifically, food and non-alcoholic beverage prices rose by 5% year-on-year in February, while the core CPI figure was at an annual 4.5%, below the consensus estimate. Finance Minister Jeremy Hunt commented on the falling inflation, stating that it sets the scene for better economic conditions.
The Bank of England expects headline inflation to temporarily fall back to its 2% target in the second quarter. The central bank is set to meet on Thursday to decide on any monetary policy moves, with expectations that they will keep interest rates unchanged at 5.25%.
Despite the positive outlook for consumers, analysts believe that the Bank of England is unlikely to think the battle against inflation is won. The bank will be closely monitoring the medium-term inflation outlook, especially from the services sector.
Overall, the lower-than-expected inflation rate for February is a promising sign for the U.K. economy. While there are positive indicators, the Bank of England remains cautious in its approach to ensure that inflation remains under control in the long term.
“Infuriatingly humble tv expert. Friendly student. Travel fanatic. Bacon fan. Unable to type with boxing gloves on.”