Good News For High Street In February As Brexit`s Impact Slows U.K. Inflation
According to the Office for National Statistics (ONS), there is a drop in consumer price index to 2.7% in February, down by 3% in January and below predictions of 2.8%.
Due to a large drop in food inflation, the slowdown has eased the pressure on the cost of living to the lowest level in seven months.
In between the months of January and February food price inflation slowed to 0.1%, dropping significantly from 0.8% rise a year earlier.
Due adverse weather conditions causing a drought last February, which helped driving up the prices of vegetables.
This was offset by an increasing rise in clothing and footwear prices as there is a rise of 1.7% compared to January, up from 1.2% last year, driven by a rise in women’s shoes.
These figures have fueled economist’s speculations that inflation may have peaked as the initial cost pressure due to Brexit began to fade. “We’re now descending from the peak of inflation caused by the fall in the pound,” BRC’s head of insight and analytics Rachel Lund said.
“The fact remains that prices faced by consumers are still growing faster than wages, conditions for retailers will remain tough for the foreseeable future as shopper’s budgets are still stretched”.
“This month’s sharp fall puts inflation below the Bank of England’s forecast for Q1 as the expected pick up in the service elements of the index is yet to show through. Today’s figures make an increase in interest rates in May a little less likely, but only a little.”
To bring inflation back under its target of 2%, it would need to raise interest rates head of the Bank of England Mark Carney had previously stated that somewhat earlier and by a somewhat greater degree”.