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Inflation has fallen to its lowest level since 2021

Inflation has fallen to its lowest level since 2021

DBritish inflation fell to its lowest level in nearly two-and-a-half years in February, paving the way for interest rate cuts. Consumer prices rose by just 3.4 per cent compared to the same month last year, the ONS statistics office announced in London on Wednesday. This is the smallest increase since September 2021. Economists polled by Reuters had expected inflation to ease to 3.5 percent, after 4.0 percent at the start of the year. Especially food and restaurant visits are no longer expensive.

Finance Minister Jeremy Hunt said falling inflation opened the door to an interest rate cut. Prime Minister Rishi Sunak's Conservative Party is far behind the opposition Labor Party in the poll. He is hoping for a tailwind from positive economic figures ahead of the upcoming parliamentary elections, the exact date of which is yet to be set. Labor said prices were still high and people were worse off after 14 years of Conservative government.

The Bank of England (BoE), which will decide on key interest rates again this Thursday, aims for a steady decline in inflation towards its target of two percent. It did all it could to fight inflation and raised the key interest rate to a 16-year high of 5.25 percent. He has held it consistently high since September 2023.

The central bank is concerned that rapidly rising wages are still a risk to the inflation outlook. The British minimum wage will rise by almost ten per cent next month. In a recent Reuters poll, most economists expect key interest rates not to be cut until the summer quarter. At least 40 percent of those surveyed expect the first step in the second quarter.