UK inflation eases to 3% in February, the lowest in 2.5 years

Posted on March 22, 2024   |  

Britain's annual inflation rate dropped more than expected in February, leading to speculation about potential interest rate cuts by the Bank of England soon.

In February, inflation reached 3.4%, the lowest since September 2021, down from January's 4.0%.

Expectations were for consumer prices to rise by 3.5% in February, but the actual decrease may offer some relief for Prime Minister Rishi Sunak and the Conservative party amidst concerns over the country's cost-of-living crisis.

Despite the decline, inflation remains above the Bank of England's two-percent target, leading to expectations of maintaining the main interest rate in the upcoming announcement.

Economists predict rate cuts from the US Federal Reserve and European Central Bank starting in June, but the outlook for the Bank of England is less certain, although rate cuts could potentially aid Britain's recession-hit economy.

The decision follows the latest regular monetary policy meeting and a recent interest-rate announcement from the US Federal Reserve.