UK inflation fell by more than expected in February, driven by a drop in the prices of clothes and shoes.
Inflation decreased to 2.8%, down from a rate of 3% in January, according to the Office for National Statistics (ONS).
The latest figures come ahead of Chancellor Rachel Reeves’ Spring Statement, where she will set out her economic plans.
Grant Fitzner, chief economist at the ONS, said women’s clothing “was the biggest driver for this month’s fall”.
Overall prices for clothing and footwear fell by 0.6% in the year to February, with children’s clothing and accessories such as hats and scarves also having an impact.
This fall was “only partially offset by small increases, for example, from alcoholic drinks”, the ONS said.
Economists had expected that inflation – which measures the rate at which prices rise – would remain at 3% in February. However, despite the fall, the figure is still above the Bank of England’s target of 2%.
The rate of price rises is also expected to increase in the months ahead, with council tax and energy and water bills all set to rise in April.
In addition, a recent survey from the ONS found that almost a half of businesses are considering price rises as they brace for next month’s tax rises and increase in the National Living Wage.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the Bank of England was unlikely to cut rates at its next meeting because February’s fall was “not an enormous change” and inflation “is still significantly above target”,
“Although policymakers won’t want to keep rates too high for too long given the stagnation in the economy, they are set to stay cautious with a rate cut looking more likely to come in June and another later in the year”, she said.
Reeves will address Parliament with her Spring Statement in Parliament on Wednesday afternoon, with further cuts to welfare spending expected.
She is also expected to confirm a downgrade to official economic growth predictions.
Some economists have raised concerns about the possibility of ‘stagflation’, where prices rise faster than the central bank’s target but the economy fails to grow.
“Economic growth is miniscule and risks going backwards, but should inflation continue to refuse to get back near the 2% target, it is difficult to see what the Bank of England can do with interest rates,” said Lindsay James from wealth manager Quilter.
Chief Secretary to the Treasury Darren Jones said the government’s “number one mission is kickstarting growth” and pledged to go “further and faster on growth through our plan for change”.
