United Kingdom: Inflation drops in February

Consumer prices rose 0.4% in February over the previous month, contrasting January’s 0.5% decline. February’s increase was largely attributable to higher prices for furniture, household equipment and maintenance, and clothing and footwear.

Inflation in February fell faster than markets and the Bank of England expected, dropping from 3.0% in January to 2.7%, partly thanks to lower petrol prices. However, inflation remains substantially above the BoE’s 2.0% target. Meanwhile, annual average inflation remained steady from a month earlier at 2.8% in February.

UK Inflation Forecast

The Bank of England sees inflation dipping to 2.4% in Q4 2018 and 2.2% in Q4 2019. FocusEconomics Consensus Forecast panelists expect inflation to average 2.5% in 2018 and 2.1% in 2019, as the impact of the weaker sterling continues to fade.