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UK inflation fell to a 2½-year low of 3.4% in February

Larger-than-expected dip raises expectations that multiple rate cuts will begin this summer.

20 March 2024

Consumer inflation in the UK continues its slow descent towards the 2% base camp, recording a slightly larger-than-expected fall to 3.4% in February from the 4.0% level in January. Coupled with goods inflation slowing we also saw producer price input inflation falling more than expected, declining 0.4% over the month, and this should help translate into additional inflation-slowing effects in the months ahead. This disinflationary tailwind will encourage market expectations of rate cuts coming this summer and market forecasts expect three 0.25% cuts for the year in total. This is probably the best a government pushing for an autumn election could hope for.

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Charles Hepworth

Investment Director
My Insights

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