The U.K. inflation rate fell more than expected in February as the impact of the pound's post-Brexit referendum slide abated.
Consumer prices rose 2.7 percent from a year earlier, down from 3 percent in January, the Office for National Statistics said on Tuesday. Economists expected an increase of 2.8 percent. The core inflation rate gained 2.4 percent.
The slowdown is good news for consumers, who have seen rising prices eat into their spending power over the past year. The Bank of England, which meets this week, expects headline inflation to subside further as the effect of sterling's 2016 deprecation fade.
The central bank is nevertheless expected to raise interest rates as early as May amid signs of strengthening domestically generated price growth. Markets are pricing in about three interest-rate hikes over the next three years.
Upward pressure on prices came from clothing and footwear, in particular women's shoes. Furniture, routine maintenance and household equipment also contributed to annual price gains.
Producer prices rose 2.6 percent from a year earlier, the least since 2016. Annual input price gains also eased, increasing 3.4 percent, the lowest since the Brexit referendum in June 2016.
House price growth slowed to 4.9 percent in January, leaving the U.K. average at 226,000 pounds ($318,000).
Source : Bloomberg