Inflation eases to 3.4% in February, the lowest level in two years, down from 4% last month

20 March 2024, 07:03 | Updated: 20 March 2024, 07:32

Inflation has fallen
Inflation has fallen. Picture: Alamy

By Kit Heren

Inflation has fallen to 3.4%, the lowest level in two years, down from 4% last month.

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The Consumer Price Index inflation figure given by the Office for National Statistics (ONS) is lower than the 3.5% predicted by many economists.

The rate of inflation, a measure which shows how prices rise over time, is now at its lowest level since September 2021, when it stood at 3.1%. By October 2022, it was 11.1% - the highest level for 40 years.

Inflation was at 4% in January and December. That was a slight but unexpected increase from 3.9% in November.

The government's target for inflation is 2% - which the UK is expected to reach within a few months.

The ONS said that the largest factors were "food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels."

Core inflation - which provides more of an insight into the state of the economy by stripping out volatile elements like energy and food - remained high at 4.5%, but slightly lower than the forecast of 4.6%.

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Responding to the latest figures, Chancellor Jeremy Hunt said: “The plan is working. Inflation has not just fallen decisively but is forecast to hit the 2% target within months.

This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work - but only if we can do so without increasing borrowing or cutting funding for public services."

Inflation has slowed
Inflation has slowed. Picture: Alamy

Shadow chancellor Rachel Reeves said "prices are still high" despite the latest fall in the rate of inflation.

"After fourteen years of chaos and uncertainty under the Conservatives working people are worse off," she said.

"Prices are still high, the tax burden is the highest it has been in seventy years and mortgage payments are going up.

"Now Rishi Sunak is putting forward a reckless £46 billion unfunded tax plan to abolish National Insurance that would risk crashing the economy and re-running the disastrous Liz Truss experiment.

"Britain cannot afford another five years of this failed Conservative government. It's time for change and it's time for Rishi Sunak to set the date for the election."

But the Bank of England is not expected to cut interest rates from 5.25% immediately in response at Thursday's meeting, but could do so in the summer.

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