UK inflation going down, down, down

INFLATION in the UK dipped to 3.4 per cent in February, its lowest for two and a half years.

The decline in the consumer prices index (CPI) from January’s 4 per cent was partly due to slower price rises for food and restaurant price, the Office for National Statistics (ONS) said on March 20.

Second-hand car prices have fallen by 7.3 per cent over the last year compared with an annual decline of 5.9 per cent in January.  The figure for core inflation, which omits unpredictable items like oil and food, dropped from 5.1 to 4.5 per cent.

Services inflation – closely watched by the Bank of England for clues of an easing in domestic inflation –  fell by 0.1 percentage point less than expected from 6.5 to 6.1 per cent.

Earlier, analysts had predicted that the CPI would fall to 3.5 per cent instead of the 3.4 per cent that took inflation to its lowest level since September 2021 when it stood at 3.1 per cent.  It was also the fastest fall in inflation since 1978.

“Good news for you, your family and the country,” Britain’s PM Rishi Sunak said on March 30.

It was also good news for Sunak as well as the Chancellor, Jeremy Hunt, now that inflation gives every indication of being on track to reach its 2 per cent target by April 2024.

The February figures also give weight to the assumption that the Bank of England will now be able to cut interest rates in the summer.