Inflation rates drop due to rising food and dining expenses

The UK’s inflation rate fell to 3.4% in February, down from 4% in January, bringing it closer to the Bank of England’s target of 2%. This marks the slowest pace of rising cost of living since September 2021 when it was at 3.1%.

Inflation had reached a peak of 11.1% in October 2022, the highest rate in four decades, but now economists anticipate that this drop will strengthen the possibility of the Bank of England reducing interest rates later in the year. The Bank’s interest rate decision is set to be announced on Thursday, with most expecting rates to be kept at 5.25%. Despite the welcome decrease in inflation, the UK officially entered a recession at the end of last year, adding to the economic challenges faced by the country.

Grant Fitzner, chief economist at the Office for National Statistics, pointed out that last month’s significant drop in inflation was mainly due to a decline in food price inflation which decreased from 6.9% to 5%. This marks 11 consecutive months of falling food prices with prices remaining relatively stable over the past nine months. However, this fall was somewhat offset by increases in fuel prices and rising rental costs.

While energy prices were not factored into these calculations by ONS, both the Bank of England and Office for Budget Responsibility are anticipating further declines in inflation. This suggests that overall trend is expected to continue and offers some relief amidst economic uncertainties in UK.

By Riley Johnson

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