FX.co ★ UK Inflation Rate Slows More than Expected

In February 2025, the United Kingdom's annual inflation rate declined to 2.8% from January's 3%, slightly below market predictions of 2.9% but consistent with the Bank of England's projections. Notably, clothing prices played a significant role in this decrease, registering their first dip since October 2021, with a drop of 0.6% compared to the previous increase of 1.8%. This was primarily driven by reductions in women's and children's apparel prices. The sectors of recreation and culture also experienced a slowdown in inflation, decreasing to 3.4% from 3.8%, particularly affecting live music admissions and recording media. Additionally, the inflation rate in housing and utilities decreased to 1.9% from 2.1%, with actual housing rents dropping to 7.4% from 7.8%. On the other hand, food inflation remained steady at 3.3%, while transport and restaurant and hotel prices saw a slight uptick, with transport rising to 1.8% from 1.7% and the dining and accommodation sector increasing to 3.4% from 3.3%. Meanwhile, services inflation remained unchanged at 5%. The annual core inflation rate also fell, reaching 3.5% from the previous 3.7%. Month-on-month, the Consumer Price Index (CPI) increased by 0.4%, recovering from a 0.1% decline but not meeting the anticipated 0.5% rise.