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| Version 2 | Version 3 |
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| UK inflation rate starts to fall | UK inflation rate starts to fall |
| (10 minutes later) | |
| The UK inflation rate fell to 3% in February from 3.5% the month before, official figures have shown. | The UK inflation rate fell to 3% in February from 3.5% the month before, official figures have shown. |
| The drop in the Consumer Prices Index (CPI) inflation rate was greater than the sharp drop analysts had expected. | The drop in the Consumer Prices Index (CPI) inflation rate was greater than the sharp drop analysts had expected. |
| Retail Prices Index (RPI) inflation, which includes housing costs, remained unchanged at 3.7% in February. | Retail Prices Index (RPI) inflation, which includes housing costs, remained unchanged at 3.7% in February. |
| The CPI inflation rate is the measure targeted by Bank of England interest-rate setters, while RPI is often used as a benchmark in wage negotiations. | The CPI inflation rate is the measure targeted by Bank of England interest-rate setters, while RPI is often used as a benchmark in wage negotiations. |
| Government target | Government target |
| The fall in CPI to 3% was slightly bigger than expected by economic analysts, who had forecast a drop to 3.1%. | The fall in CPI to 3% was slightly bigger than expected by economic analysts, who had forecast a drop to 3.1%. |
| INFLATION UPS AND DOWNS Price up FootwearWomen's clothing Price down ToysComputer gamesGas | INFLATION UPS AND DOWNS Price up FootwearWomen's clothing Price down ToysComputer gamesGas |
| A letter from the Bank of England's governor is required if inflation is more than one percentage point above or below the government's 2% target. | A letter from the Bank of England's governor is required if inflation is more than one percentage point above or below the government's 2% target. |
| The rise in the CPI inflation figure to 3.5% in January had been put down to VAT returning to 17.5%. | The rise in the CPI inflation figure to 3.5% in January had been put down to VAT returning to 17.5%. |
| There will now be hopes that that inflation has peaked, and will drop back below the bank's 2% target by the end of the year. | There will now be hopes that that inflation has peaked, and will drop back below the bank's 2% target by the end of the year. |
| "It's the second month in a row that it's undershot the consensus," said Peter Dixon, economist at Commerzbank. | "It's the second month in a row that it's undershot the consensus," said Peter Dixon, economist at Commerzbank. |
| "It tells us that we can be pretty confident that the Bank of England's view that inflation will fall sharply this year is on track." | "It tells us that we can be pretty confident that the Bank of England's view that inflation will fall sharply this year is on track." |
| 'Serious pressures' | 'Serious pressures' |
| However, the British Chambers of Commerce have warned against any reduction in interest rates in the near future. | |
| "The economy remains weak, businesses are still facing serious pressures, and it would be wrong for the MPC to contemplate early interest rate rises," said David Kern, chief economist at the BCC. | "The economy remains weak, businesses are still facing serious pressures, and it would be wrong for the MPC to contemplate early interest rate rises," said David Kern, chief economist at the BCC. |
| "If, in the Budget, the chancellor presents a more credible plan for reducing the unsustainable deficit, it will be easier for the MPC to persevere with lower interest rates, making a business-led recovery possible." | "If, in the Budget, the chancellor presents a more credible plan for reducing the unsustainable deficit, it will be easier for the MPC to persevere with lower interest rates, making a business-led recovery possible." |
| UK interest rates have been at the record low level of 0.5% for 12 consecutive months, as the Bank of England seeks to aid the economic recovery. | UK interest rates have been at the record low level of 0.5% for 12 consecutive months, as the Bank of England seeks to aid the economic recovery. |
| Retailer restraint | Retailer restraint |
| The Office for National Statistics said that in February, recreation and culture made the largest contribution to the fall in the annual CPI rate, followed by housing and household services. | The Office for National Statistics said that in February, recreation and culture made the largest contribution to the fall in the annual CPI rate, followed by housing and household services. |
| Lower utility prices have also helped bring down inflation. | |
| Clothing and footwear added most to the annual rate. | Clothing and footwear added most to the annual rate. |
| "February's moderation in consumer price inflation was primarily due to utility price cuts and the fact that food prices rose much less than a year ago," said Howard Archer, economist at IHS Global Insight. | "February's moderation in consumer price inflation was primarily due to utility price cuts and the fact that food prices rose much less than a year ago," said Howard Archer, economist at IHS Global Insight. |
| "It is also likely that many retailers put prices up less this February than a year ago following the ending of the post-Christmas clearance sales, as there was less sharp and extensive discounting in the sales in the first place." | "It is also likely that many retailers put prices up less this February than a year ago following the ending of the post-Christmas clearance sales, as there was less sharp and extensive discounting in the sales in the first place." |
| Meanwhile, core inflation, which excludes food and energy prices, fell to 2.9% in February from 3.1%. | Meanwhile, core inflation, which excludes food and energy prices, fell to 2.9% in February from 3.1%. |