(Reuters) – Inflation in the United Kingdom slowed more than expected year-on-year in February, paving the way for interest rate cuts in coming months, data released by the National Office of National Interest showed on Wednesday. statistics (ONS).
Consumer prices rose 3.4% year-on-year in February, slightly less than expected and a slowdown from the 4.0% rise recorded in January, with the inflation rate coming in at its lowest level since September 2021.
Economists polled by Reuters on average forecast a slowdown to 3.5% from 4.0% in January.
Food and restaurant prices were the main factors in the decline, offset by a contribution to the increase in fuels.
Excluding energy and food, the increase in consumer prices stood at 4.5%, compared to 5.1% in January. The Reuters consensus was 4.6%.
“Inflation is no more persistent than the BoE predicted and is moving in line with the trajectory that the BoE believes would justify interest rate cuts,” said Paul Dales, an analyst at Capital Economics.
Services price inflation slowed to 6.1% from 6.5% in January, in line with BoE forecasts.
British Finance Minister Jeremy Hunt responded to the data by saying on Wednesday that good economic news could help the government achieve its goal of completely abolishing social security taxes.
“This paves the way for better economic conditions which could enable us to make progress in our ambition to boost growth and make work better,” said Jeremy Hunt.
(Writing by Augustin Turpin; with contributions from Andy Bruce and Suban Abdulla; editing by Kate Entringer)
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