Decrease in Inflation Due to Rising Costs of Food and Dining Out


Decrease in Inflation Due to Rising Costs of Food and Dining Out

Inflation fell to 3.4% in February, down from 4% in January, which brings it closer to the Bank’s target of 2%. This drop signifies that the cost of living is increasing at a slower pace, reaching its slowest rate since September 2021 when it was at 3.1%. The rate at which prices rise over time, inflation has been declining since it peaked at 11.1% in October 2022, the highest rate in 40 years. The Office for National Statistics (ONS) attributed the decrease in food price inflation as a contributing factor to this drop, though prices are still rising, albeit more slowly.

Most economists anticipated this decline and believe it will increase the likelihood of the Bank of England cutting interest rates later in the year. The latest interest rate decision is expected to keep rates at 5.25%. While the decrease in inflation is favorable for the government, it follows recent data confirming the UK’s recession at the end of last year. Grant Fitzner, chief economist at the ONS, noted that the larger-than-expected drop in last month’s figure was due to the significant decrease in food price inflation, which went from 6.9% to 5%.

Mr. Fitzner mentioned that there have been 11 consecutive monthly decreases in food prices, with little change over the past nine months. Although there were price raises in fuel and rental costs, the overall trend is consistently decreasing. The ONS did not factor in energy price drops in its calculations, but the Bank of England and the Office for Budget Responsibility predict further declines in inflation. The economy is expected to benefit from this downward trend as it stabilizes the cost of living for consumers.

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