Will this be enough for the Bank of England to resume cutting rates?
The UK’s annual inflation rate climbed by 2.8% in February, lower than the 10-month high 3.0% recorded in January but still above the 2% government target, figures released by the Office for National Statistics (ONS) on Wednesday have shown.
On a monthly basis, the Consumer Price Index (CPI) rose by 0.4% in February 2025, compared to the 0.6% growth recorded in the same month last year.
Core inflation, which excludes energy, food, alcohol, and tobacco, increased to 3.5% year-on-year, down from 3.7% in the previous month.
“Inflation eased in February,” said Grant Fitzner, ONS chief economist. “Clothing prices, particularly for women’s clothes, were the biggest driver for this month’s fall. This was only partially offset by small increases, for example, from alcoholic drinks.”
Consumer Price Index (CPI) rose by 2.8% in the 12 months to February 2025, down from 3.0% in January 2025.
— Office for National Statistics (ONS) (@ONS) March 26, 2025
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“Today’s inflation data will feel like a balm to those stung by recent results,” commented Paul Noble, chief executive of Chetwood Bank. “While economic uncertainty persists, fuelled in no small part by current events, today’s result offers hope that inflationary pressures might be easing – if only for a moment.
“After a first Budget that left a significant mark, the Chancellor now faces another pivotal moment. The new government’s balancing act remains delicate, but today’s figures provide some breathing room ahead of the Spring Statement later today. The Bank of England, too, will be watching closely as it weighs the timing of future rate cuts.”
According to Ben Thompson, deputy chief executive of Mortgage Advice Bureau, inflation falling will likely counterbalance the negative impact of last month’s inflation rise on buyer confidence.
“Coupled with the Bank of England’s decision to hold interest rates last week, this slow and steady approach should give further comfort to prospective buyers,” Thompson said. “Borrowers are slowly getting used to the fact that mortgage rates are unlikely to fall much further from here, and that this is broadly where new pricing stands.”
For Movera chief executive Nick Hale, with inflation unexpectedly falling, today’s Spring Statement comes at a crucial moment for the housing market.
“Lower inflation should give the Bank of England more confidence to continue cutting rates, which would help bring down mortgage costs and improve affordability for buyers,” Hale said.
“The government has made economic growth a priority, and housing plays a key role in that. A stable inflation outlook gives the Chancellor room to introduce measures that could boost housing supply and support homeownership.”
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