UK Records Lower-Than-Expected Inflation in February as Food and Diner Prices Drop

Inflation in the United Kingdom came in lower than expected in February and down from a 4% rise in January.

According to an official data from the Office for National Statistics, the headline inflation in February was 3.4% year-on-year, which was lower than a 3.5% increase estimated by Reuters poll. Meanwhile, inflation grew 0.6% on a monthly basis, returning to the positive territory after a contraction of 0.6% a month prior. The month-on-month data also came in lower-than-expected from a 0.7% rise forecast by Reuters.

The official data showed that food, restaurants and cafes were the biggest contributors to the decrease in February, but housing and fuel remained the biggest pressure on the prices.

The Bank of England expected a temporary decline of inflation to its target range of 2% in the second quarter, while expecting an upward rise later in the year.

Meanwhile, UK’s core CPI, which excludes volatile food, energy, alcohol and tobacco prices, came in at 4.5% year-on-year, which was below an estimate of 4.6% from the market and down from 5.1% from January.