UK inflation stays at 0.3%

The UK’s inflation rate remained at 0.3% in February, unchanged from January figures, according to data released by the Office for National Statistics (ONS) [1].

Economists polled by Bloomberg had expected to see a slight pick up to 0.4% [2].

On a month-on-month basis, prices rose by 0.2%, from a decline of 0.8% in the previous month [2].

The Bank of England (BoE) who adjust the interest rates to target inflation at 2%, are forecasting that inflation will remain below 1% for the remainder of the year [3].

Other ONS figures published at the same time indicated that Chancellor George Osborne is close to missing his target for cutting the country’s budget deficit in the 2015-16 financial year, with government borrowing falling less than expected in February, at £7.1bn. This means the total deficit for the 11 months of the year so far is £70.7bn, against Osborne’s full-year target of £72.2bn [1].

ONS stated that the biggest fall in contribution came from the transport sector, from price changes for items such as road passenger transport, second-hand cars and bicycles. Although rising food prices, particularly for vegetables, milk, cheese and eggs offset this [2].

[1] BBC News. ‘UK inflation rate stays at 0.3%’.
[2] Financial Times. ‘Bikes tap brakes on UK inflation’.
[3] City AM. ‘UK inflation maintains 12-month high of 0.3 per cent in February’.