UK inflation remains at 0.3%

Money

The CPI rate of inflation for February remained at 0.3 per cent, the same as January.

Figures from the Office for National Statistics show that rising food prices, particularly vegetables, pushed the rate higher. This was counteracted by price rises in the transport sector, including for road passenger transport, second-hand cars and bicycles.

The February rate follows three consecutive months of small rises, but the rate remains below the Bank of England’s target of 2 per cent. The rate for January and February is the highest level since January 2015.

“February’s reading will have been broadly in line with the Bank of England’s expectations and does little to change the interest rate outlook. In its February quarterly inflation report, the Bank of England forecast inflation to average 0.4 per cent in the first quarter,” says Howard Archer, chief UK and European economist at IHS Global Insight.

“Consumer price inflation will likely hover around 0.3 per cent in the near-term before trending gradually upwards, although much will clearly depend on what happens with oil prices which have strengthened modestly from the 12-year low seen in mid-January.”

Ben Brettell, senior economist at Hargreaves Lansdown, says: “Today’s data release continues the trend of inflation being at or very close to zero, and confirms the complete absence of pressure on the Bank of England to lift interest rates.

“However, the UK economy is battling a number of significant headwinds at present. Slowing global growth, the upcoming EU referendum and deflation in the eurozone are creating considerable uncertainty, while wage growth appears much weaker than the peak we saw last summer.”