UK inflation falls to lowest point in over two years

CPI rose by 0.6% on a monthly basis in February, compared with a 1.1% rise in the same month last year.

The CPI including owner occupiers' housing costs (CPIH) also grew by 3.8% over the past 12 months, down from 4.2% in the year to January.

According to ONS, the largest downward contributors to CPIH and CPI came from food, restaurants, and cafes, while the largest upward contributors were from housing and household services and motor fuels.

Industry professionals reacted to the latest inflation drop:

Andrew Montlake, managing director at Coreco:

“There will be many celebrating the fact that the UK is no longer an inflation nation today, after a larger than expected fall to 3.4%, and a clear trajectory to the magical 2% level now in sight.

“While there is still a lot of global and national pressures to play out, it should relieve some pressures on SWAP rates, which will see lenders start to reduce mortgage rates once more.

“What the markets and the high street need, however, is some positive and decisive rhetoric from the Bank of England, confirming that while there will be no surprise cut this month, the first reduction will come imminently.”

Emma Jones, managing director at Whenthebanksaysno.co.uk:

“An early rate cut before the summer will do wonders for consumer confidence and sentiment is everything.

“The BoE should reduce the base rate on the back of positive data like this.

“There is no doubt that homeowners who have been stretched due to the cost of living over the past two years could really benefit from lower rates, especially those coming out of fixed deals this year.

“For some, the mortgage pinch hasn’t yet been felt and the BoE could now take the pressure off.”

Stephen Perkins, managing director at Yellow Brick Mortgages:

“This dramatic drop in inflation is incredibly welcome to borrowers and the broader economy.

“Hopefully this will be sufficient to see mortgage lenders reduce their rates even though it is still unlikely to sway the BoE from reducing the base rate before the summer.”