UK inflation slows to lowest level in almost 2.5 years

LONDON, Mar 20 (AFP): Britain's annual inflation rate fell more than expected in February, official data showed Wednesday, fuelling speculation that the Bank of England will start cutting interest rates in the coming months.
The Office for National Statistics said inflation reached 3.4 per cent last month-the lowest level since September 2021 -- as growth in food prices eased further.
The rate came down from 4.0 per cent in January, while the Bank of England and other economists had forecast consumer prices to rise by 3.5 per cent in February.
The drop may give a boost to embattled Prime Minister Rishi Sunak and his Conservative party as they face the prospect of losing a general election later this year amid discontent over the country's cost-of-living crisis.
But with inflation remaining well above the BoE's two-per cent target, the central bank is widely expected to keep its main interest rate on hold in an announcement due Thursday.
This follows a regular monetary policy meeting and also an interest-rate announcement Wednesday from the US Federal Reserve.
Economists are forecasting the Fed and European Central Bank will begin cutting rates from June-having massively hiked borrowing costs to tackle soaring prices.
For the BoE, the outlook is less clear according to economists, even if rate cuts could give a lift to Britain's recession-hit economy.
"The Bank of England has already said it's not going to cut interest rates in a hurry," Sarah Coles, head of personal finance at Hargreaves Lansdown, said following Wednesday's data.
"It's going to wait for lower inflation to bed in. It means there's a decent chance we won't see cuts until August."
Other analysts said a cut was likely to occur in June. There is no BoE monetary policy meeting in July.
"Right now, the market is split between the first-rate cut coming at the June or August meeting," noted Kathleen Brooks, analyst at XTB trading group.