Inflation has tumbled to a greater than two-year low as Brits had been boosted by easing meals prices.
The headline CPI charge dropped to three.4 per cent in February, down from 4 per cent in January and higher than the three.5 per cent analysts had pencilled in.
The discount was hailed by Chancellor Jeremy Hunt, who hinted that it’s going to give him area for extra tax cuts earlier than a common election anticipated within the Autumn.
With predictions that inflation shall be again to the Financial institution of England‘s 2 per cent goal quickly, Mr Hunt additionally urged the information ‘opened the door’ for rates of interest to start out coming down imminently.
Mortgage-payers are keenly awaiting the most recent resolution from Threadneedle Road tomorrow, though few anticipate any shift from 5.25 per cent this month.
UK inflation eased to three.4 per cent in February with meals and vitality costs driving the CPI charge down
Jeremy Hunt speaks to Rishi Sunak after presenting the annual price range assertion within the Home of Commons on March 6
Grant Fitzner, chief economist on the ONS, mentioned: ‘Inflation eased in February to its lowest charge for practically two-and-a-half years.
‘Meals costs had been the principle driver of the autumn, with costs virtually unchanged this 12 months in contrast with a big rise final 12 months, whereas restaurant and cafe value rises additionally slowed.
‘These falls had been solely partially offset by value rises on the pump and an extra improve in rental prices.’
Rishi Sunak shall be hoping that the brighter image can change his fortunes, after a recent bout of Tory infighting over the dearth of a Price range bounce and Tory donor race row.
Mr Hunt – who yesterday gave a robust indication that he expects the election in October – mentioned this morning the figures had been proof that the federal government’s ‘plan is working’.
‘Inflation has not simply fallen decisively however is forecast to hit the two per cent goal inside months.
‘This units the scene for higher financial circumstances which might enable additional progress on our ambition to spice up development and make work pay by bringing down nationwide insurance coverage as we work in the direction of abolishing the double tax on work – however provided that we are able to achieve this with out rising borrowing or reducing funding for public providers.’
Chatting with broadcasters after the inflation numbers had been launched, Mr Hunt mentioned: ‘What I am actually saying is that as inflation will get nearer to its goal, that opens the door for the Financial institution of England to think about bringing down rates of interest, that brings down mortgage charges, that makes a really large distinction.
‘It is too early to know whether or not we’ll have one other fiscal occasion earlier than the election, however what I’d say is that what you possibly can see is the tough choices the Authorities has taken over the past 12 months are paying off and we are able to see that – tough although they had been – they had been the suitable factor to do as a result of inflation is now coming proper down.’
Nonetheless, shadow chancellor Rachel Reeves mentioned ‘costs are nonetheless excessive’ regardless of the most recent fall within the charge of inflation.
Suren Thiru, economics director on the Institute of Chartered Accountants in England and Wales, mentioned: ‘This notable decline is additional proof that the UK is quick approaching the end line in its battle in opposition to surging inflation.’
Ben Thompson, deputy chief govt at Mortgage Recommendation Bureau, mentioned: ‘Inflation in February being simply 1.4 factors above the Financial institution of England’s 2 per cent goal might be the beginning gun we have been ready for, by way of getting clearer visibility on precisely when base charge could begin ultimately to return down.
Forward of the statistics, Mr Hunt gave an upbeat evaluation of Britain’s financial prospects, saying development might come near US ranges.
Regardless of UK plc sliding into recession on the finish of final 12 months, the Chancellor mentioned it was ‘completely attainable’ the UK might develop quicker than Europe.
US GDP grew by 3.2 per cent within the final quarter of 2023, figures present, whereas the UK financial system shrank by 0.3 per cent. Eurozone financial development was flat in the identical interval.
The US financial system defied recession fears, helped by a rise in rates of interest to tame inflation and a decent labour market which has saved wages excessive.
Showing earlier than friends on the Financial Affairs Committee, Mr Hunt spoke of efforts to boost productiveness in the private and non-private sectors.
He mentioned: ‘In the event you have a look at our insurance policies to extend funding by the personal sector with the complete expensing tax break that we introduced, for those who have a look at our nurturing of the know-how sector which I feel goes to be an awesome alternative for the UK going ahead.
‘It is completely attainable to get our financial development charge healthily nearer to US ranges of development in comparison with continental European ranges of development.’
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