© Reuters. FILE PHOTO: People shop at Borough Market in London, Britain July 19, 2023. REUTERS/Anna Gordon/File Photo
LONDON (Reuters) -British inflation cooled in February by slightly more than economists and the Bank of England expected, according to data on Wednesday that could give the central bank more confidence that it can cut interest rate cuts in the coming months.
Consumer prices rose by a slightly weaker-than-expected 3.4% in annual terms in February, slowing from a 4.0% increase in January, and the lowest rate of inflation since September 2021, the Office for National Statistics said on Wednesday.
A Reuters poll of economists had pointed to an annual rate of 3.5%.
Core inflation, which excludes energy, food and tobacco prices, also slowed to 4.5%, down from 5.1% in January. The Reuters poll had pointed to a reading of 4.6%.
The figures were published a day before the Bank of England announces its latest decision on interest rates.
Services inflation, which the BoE watches closely, slowed to 6.1% from 6.5% in January – as the central bank had expected last month.
“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay,” finance minister Jeremy Hunt said in response to the figures.
Hunt cut the rate of social security contributions on March 6 for the second time in less than four months.
The opposition Labour Party, far ahead in opinion polls before an election expected later this year, said prices were still high and that people were worse off after 14 years of Conservative government.
