UK inflation cools more than expected in February but fresh climb expected

26/3/2025 16:53

British inflation slowed more than expected in February, bringing some relief to consumers ahead of a likely new pick-up in price growth and to finance minister Rachel Reeves before her budget update speech on Wednesday.



Consumer prices rose by 2.8% in annual terms in February after a 3.0% increase in January, the Office for National Statistics said, as clothing and footwear prices fell for the first time in more than three years.



Economists polled by Reuters had pointed to a reading of 2.9% in February while the Bank of England had expected 2.8% in a set of forecasts published in early February.



Sterling fell by more than a third of a cent against the U.S. dollar.



Two-year British government bond yields, which are sensitive to speculation about BoE interest rates, fell by almost seven basis points, on track for their biggest daily fall in almost two months.



Economists warned that rising energy prices will push inflation up again soon.