UK inflation rate at four-year low
A fall in petrol prices pushed the UK inflation rate to a new four-year low of 1.7% last month, figures show. Thisis the second consecutive month that the Consumer Prices Index rate has been below the Bank of England’s 2% target, having stood at 1.9% in January.
Inflation measured by the Retail Prices Index (RPI) fell to 2.7% in February from 2.8% the month before.
Average petrol prices fell by 0.8p a litre between January and February, compared with a rise of 4p a year ago.
The Office for National Statistics (ONS) also said diesel prices dropped by 0.8p a litre, compared with a 3.7p increase the year before.
Average total earnings rose 1.4% in the three months to January, compared with a year ago, according to the ONS’ latest figures.
Public sector workers saw a rise of just 0.9% in the same period, but private sector pay growth was 1.7%, meaning it has already caught up with the increase in prices.
Falling inflation promises to boost confidence and comes at a time when households are increasingly willing to make large purchases and house prices are accelerating. ONS data published on Tuesday recorded a 6.8 per cent annual rise in January
The Bank of England must consider how to deal with the contrasting pressures from the property market and general inflation. Governor Mark Carney warned last week that loose monetary policy and subdued inflation can lead to excessive borrowing and financial vulnerability.
Inflation is now comfortably below the bank’s 2 per cent target, giving its rate-setting Monetary Policy Committee further ammunition for its argument that there is little need for an interest rate rise in the near future, despite the UK’s rapid economic recovery.