Crowds of shoppers and visitors on Oxford Street on August 28, 2024 in London, UK.
Mike Kemp In photos Gety pictures
The inflation rate in the United Kingdom decreased slightly to 2.8 % in February, as it reached a little less than the expectations of analysts, according to the data issued by the National Statistical Office (ONS) on Wednesday.
The economists of Reuters expected the consumer price index to reach 2.9 % in the twelve months until February.
The inflation rate increased sharply to 3 % in January, after decreasing to 2.5 % of the expected in December.
The basic inflation, which excludes the prices of fluctuating energy, food, alcohol and tobacco, increased by 3.5 % in February, a decrease from 3.7 % in January.
“The slowdown in the average until February 2025 reflects the firm contributions of four sections and escalating contributions from five sections. The largest declining contributions of clothes, shoes, housing, home services, entertainment and culture came.” The agency said.
sterling It decreased by 0.1 % against the dollar, as it reached 1.2925 after the data is issued.
The latest data is the food for thinking for England, Which left interest rates by 4.5 % at the monetary policy meeting last weekWhile the British economy is struggling with uncertainty about world trade policies, potential definitions, the expected temporary rise in inflation and stagnation that waves on the horizon at home.
In a statement at the time, the central bank said, “It has intensified uncertainty in the World Trade Policy, and the United States has provided a set of customs tariffs ads to which some governments have responded.”
He added: “There have been increased cases of other geopolitical uncertainty as well, and indicators of financial market fluctuations in the world increased.”
The Bank of Engels was already It warned in February that it is expected that inflation will rise temporarily to 3.7 % In the third quarter of this year, where energy costs are accelerated. The 2025 growth forecast for the United Kingdom has also decreased to 0.75 %.
“Red Herring” slowdown
The British government will closely see inflation data, as Finance Minister Rachel Reeves is later on Wednesday to update legislators on spending plans and taxes, as well as economic expectations in the country.
REEVES is expected to announce discounts in spending on billions of pounds as a way to close the budget deficit caused by the high borrowing costs since its first financial plan issued last fall.
The Minister of Finance has already pledged to adhere to the “financial rules” that he imposed self-imposed to ensure the fulfillment of daily spending through tax revenues and that public debt decreases as a share of economic production by 2029-30.
Refiz Spring statement It is scheduled to be presented in Parliament at approximately 12:30 pm London time, and it will be delivered alongside the latest economic expectations from the Budget Responsibility Office (OBR), which is an independent public finance in the country.
Obr is And according to what was expected To reduce UK growth expectations for the year 2025 and a half of its previous estimate by 2 %, with the decrease in the output of the rising pressure on government borrowing requirements and forcing Reeves to reduce public spending by about 10 billion pounds (12.96 billion dollars).
In the aftermath of the issuance of inflation data, the main secretary of the Treasury Ministry, Darren Jones, said that the priority of the Ministry of Finance is “the direct growth to raise the standard of living for workers” and “providing economic stability to secure finance to people” as the government describes as a “changing world”.
However, Paul Dales, the UK’s chief economist at Capital Economics, warned that the latest inflation will not help in BOE or Reeves a lot.
“The decline in inflation in CPI from 3.0 % in January to 2.8 % in February is some red herring because inflation may return to 3 % in April and about 3.5 % by September. This and the risk of separation from wages may mean that the Bank of England will pressure interest rate discounts at some point,”
He added: “If this has prompted an additional increase in market price expectations, today it may not be the only time this year that the consultant has to tighten the fiscal policy to compensate for the high borrowing costs.”
Dales said the consumer price index may return to about 2.5 % in March, but this will be a short reconstruction, with the increasing energy costs to high inflation, and to 3.5 % possible in September.
“This will be slightly less than the bank’s expectations of 3.7 % and we doubt that the weak economy will affect the growth of wages and inflation in the coming. Inflation may decrease to 2 % in 2026, which means that interest rates can be reduced from 4.50 % to 3.50 % now,” he said.
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