UK inflation eases to 3.4%

Slower prices rises for food contributed to a further easing of UK inflation in February, according to new data.

The consumer prices index (CPI) measure of inflation fell to 3.4%, the lowest level for nearly two and a half years and down from 4.0% in January.

Prices for food and non-alcoholic beverages rose by 5.0% in the year to February, compared with 7.0% in January, the Office for National Statistics (ONS) said. This continues an 11-month downward trend from the peak of 19.2% in March 2023, the highest annual rate seen for over 45 years.

Prices also eased for restaurants and hotels, as well as alcohol and tobacco, and clothing and footwear.

“These falls were only partially offset by price rises at the pump and a further increase in rental costs,” said ONS chief economist Grant Fitzner.

The monthly report comes ahead of the Bank of England’s latest interest rate decision on Thursday. Analysts expect the base rate to be held at 5.25%, with a potential reduction later in the year.