UK inflation falls to the lowest level for more than two years, Office for National Statistics says

Inflation in the UK fell back by more than expected last month to the lowest level in more than two years as the growth in food prices eased for cash-strapped households, official figures have shown.

The Office for National Statistics (ONS) said that Consumer Prices Index inflation stood at 3.4% in February – down from 4% in January and the lowest level since September 2021.

Most economists had been expecting inflation at 3.5% last month.

Inflation is now closer towards the Bank of England’s 2% target and comes ahead of the latest interest rate decision on Thursday.

Policymakers are widely expected to keep rates on hold at 5.25%, but the steep fall in the CPI is likely to reinforce expectations that the Bank is moving closer to cutting rates later this year.

Grant Fitzner, chief economist at the ONS, said: “Inflation eased in February to its lowest rate for nearly two-and-a-half years.

“Food prices were the main driver of the fall, with prices almost unchanged this year compared with a large rise last year, while restaurant and café price rises also slowed.

“These falls were only partially offset by price rises at the pump and a further increase in rental costs.”

In response to fresh inflation figures, the Chancellor Jeremy Hunt said: “The plan is working.

“Inflation has not just fallen decisively but is forecast to hit the 2% target within months.

“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work – but only if we can do so without increasing borrowing or cutting funding for public services.”