Inflation came in lower than expected for February, heading back in the right direction.
Annualised inflation stood at 3.4% in February, measured by the consumer prices index (CPI), down from the 4% reported in January and below the 3.5% forecast.
The largest downward contributions to the monthly change came from food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels.
Meanwhile, core inflation, which takes out volatile factors like energy, food, alcohol and tobacco to give a clear picture of underlying trends, was 4.5% in the 12 months to February 2024, declining from 5.1% in January.
Alpesh Paleja, Lead Economist, CBI, said: “Inflation is heading in the right direction, and should fall below the Bank of England’s 2% target sometime in the Spring. However, the path beyond this is likely to be bumpy: shifting base effects mean that it will likely rise back above 2% later in the year, before settling down more sustainably.
“While the Bank of England are likely to look through these ups and downs, they will still want to see more definitive movement on domestic price pressures before committing to cutting interest rates.”
