Food leads rate of inflation down to 3.4%, lowest level since September 2021

The rate of inflation slowed sharply to an annual rate of 3.4% in February, according to official figures.

Data from the Office for National Statistics (ONS) showed an easing from the 4% rate recorded the previous month.

It marks further progress in the battle against energy-led price growth that followed Russia’s war in Ukraine and inflation is forecast to fall back below the Bank of England‘s target rate of 2% in the next few months.

However, the Bank’s interest rate-setting committee is widely expected to hold off on removing the medicine it has dished out to tackle inflation, possibly until the summer.

Interest rate cuts would provide relief to millions of borrowers who have faced hefty increases to their costs as a consequence of higher interest rates.

But committee members are wary of starting the process as it’s feared inflation may tick back up in the second half of the year.

They are waiting for visibility on many price pressures including the pace of wage growth, disruption to shipping in the Red Sea and rising oil costs.

Regular pay rises, according to separate ONS data last week, were still running above 6% – a level that could help drive demand in the flatlining economy and force up the pace of price increases.

Brent crude oil costs hit levels not seen since October last year earlier this week at $87 per barrel.

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