Latest data released by the Office for National Statistics (ONS) revealed that the UK saw a decrease in inflation to 3.4%, which is the lowest it has been in two and a half years.
Gatekeepers News reports that this reduction in inflation has raised hopes that the Bank of England will reduce interest rates in the coming summer months.
The Consumer Price Index (CPI) dropped from January’s 4%, indicating that prices have been rising at a slower rate. A decline in inflation doesn’t imply that prices are decreasing, but rather that they are increasing at a slower pace.
The inflation rate has been declining steadily since October 2022 when it reached its highest level in 40 years at 11.1%.
ONS chief economist Grant Fitzner said: “Food prices were the main driver of the fall, with prices almost unchanged this year compared to a large rise last year, while restaurant and cafe prices also slowed.”
On a monthly basis, CPI rose 0.6 per cent last month compared with a rise of 1.1 per cent in February 2023, the ONS said.
Finance Minister Jeremy Hunt welcomed the news.
“Inflation has not just fallen decisively but is forecast to hit the two-percent target within months,” he said in a statement.
“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth.”
Ahead of a general election this year at which his Conservative party is forecast to lose power to main opposition Labour, Hunt cautioned against “increasing borrowing or cutting funding for public services” to fund tax cuts.
