Data released on Wednesday by the Office for National Statistics (ONS) showed that the UK’s inflation rate eased marginally to 2.8% in February, slightly under the forecasted figures by analysts of a rise to 2.9%.
After climbing sharply to 3% in January, the inflation rate showed signs of stabilization. Core inflation, excluding volatile items like energy and food, stood at 3.5% in February, down from 3.7% in the previous month.
The ONS highlighted that the February slowdown came from various sectors, including clothing, footwear, and housing, despite increases in others.
The inflation figures present important considerations for the Bank of England (BOE), which opted to maintain interest rates at 4.5% during last week’s monetary policy meeting. This decision comes amidst uncertainties facing the UK economy, including global trade policy challenges, potential tariffs, an anticipated temporary inflation increase, and the threat of domestic economic stagnation.
In addition, the central bank in February cautioned that inflation is projected to temporarily increase to 3.7% in the third quarter of this year due to anticipated rising energy costs, while also revising its 2025 growth forecast for the UK to 0.75%.
Meanwhile, the British government is attentively monitoring inflation data as Finance Minister Rachel Reeves prepares to update Parliament on spending, taxation, and economic plans. Reeves is set to unveil significant spending cuts to address a budget gap caused by rising borrowing costs since her last fiscal plan.
The minister is scheduled to deliver her Spring Statement to Parliament at 12:30 PM London time, presenting it with the latest economic forecasts from the Office for Budget Responsibility (OBR).
