UK inflation projected to ease to 2.9% in February

UK inflation for February is expected to be lower, as the official data will be released on Wednesday. This will coincide with the Chancellor's spring statement. Analysts predict the Consumer Prices Index (CPI) inflation will drop to 2.9%, down from 3% in January. However, this rate still exceeds the Bank of England's target of 2%. Lower rent costs are likely a key factor in this decrease, as home prices continue to stabilize. Airfares may have also increased less in February compared to last month. However, hotel prices are expected to have risen, which might impact the inflation rate negatively. Entertainment costs, such as cinema and concert tickets, are also thought to have gone up. The inflation report arrives as Chancellor Rachel Reeves prepares to announce spending cuts in some government areas. While easing inflation could be a positive sign in her efforts to manage living costs, experts warn of potential increases in April. New tax year price resets for energy, water, and council tax could elevate inflation to about 3.5% in April. Economists foresee inflation peaking around September, with a possible rise in prices as companies might pass on higher taxes to consumers. A senior economist from Deutsche Bank mentioned that inflation could eventually drop to around 2% by the first half of 2026, although uncertainties remain.