ONS inflation data: inflation drops in UK, but concerns remain

This morning, the United Kingdom’s Office for National Statistics (ONS) released the latest inflation figures, for February 2024.

The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.8% in the 12 months to February 2024, down from 4.2% in January.

Year-on-year, Consumer Prices Index (CPI) rose by 3.4% in the 12 months to February 2024, down from 4.2% in January. On a monthly basis, CPI rose by 0.6% in February 2024, down considerably when compared with the rise of 1.1% experienced in February 2023.

UK inflation doesn’t matter, says expert – here’s what to focus on instead

Core inflation, however, was down more marginally.

Core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.8% in the 12 months to February 2024, down from 5.1% in January; the CPIH goods annual rate slowed from 1.8% to 1.1%, while the CPIH services annual rate eased slightly from 6.1% to 6.0%.

No surprises for the markets

The news was broadly in line with market estimates, and even better than anticipated.

Forecasts ahead of today estimated that the inflation rate would be at 3.5% today YoY, down from the previous reading of 4.2% in January. MoM inflation estimations were around 0.6% for February.

Time for rate cuts?

The news came just hours before the Bank of England will announce its latest interest rate decision, on Thursday morning.

Commenting on the timing of the inflation figures, David Morrison, Senior Market Analyst at Trade Nation said that:

While inflation has progressed downwards as expected, the only marginal decrease in core inflation may prove that inflation may be stickier than it first seemed.

This will likely give the BoE plenty of food for thought ahead of their rate decision tomorrow, and may even provide the evidence needed for its first rate cut.