UK inflation has fallen to 3 per cent, prompting hopes that an interest rate cut will follow.
The fall in the Consumer Price Index (CPI) data, published by the Office of National Statistics, follows a surprise rise in December to 3.4 per cent.
It shows a return to the gradual downward trend seen at the end of last year, with analysts estimating it remains on course to hit the government’s 2 per cent target by April.
After this week’s rising unemployment and slowing wage growth data, and a continually weak economy, it is hoped the fal could spur the Bank of England (BoE) to cut interest rates next month when the Monetary Policy Committee convenes to vote on 19 March.
Inflation hit a high of more than 11 per cent in October 2022, and while it has returned to more manageable levels in the past year, the pace has been slower than businesses and households would have liked, resulting in interest rates staying higher for longer.
Falling household bills and the reduction of the energy price cap in April are expected to contribute to bringing CPI inflation back to 2 per cent by spring. Food inflation is also expected to moderate, having been a big contributor to high inflation last year.
