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Inflation Falls to 2.8% in February as Clothing Discounts Drive Unexpected Dip. UK inflation fell more than expected in February, dropping to 2.8% from 3% in January, according to the Office for National Statistics (ONS). The decline was largely driven by clothing and footwear prices, which fell for the first time since 2021 due to an unusually high number of sales. Grant Fitzner, ONS chief economist, said women’s clothing was the biggest factor in February’s drop, only slightly offset by minor price increases in items like alcohol. The seasonal shift that typically ends January sales did not materialise, with discounts lingering longer than usual across fashion items and accessories. The fall outpaced forecasts from economists polled by Reuters, who had expected inflation to ease to 2.9%, though it remains above the Bank of England's 2% target. Despite the dip, inflation is projected to rise again in April as council tax, energy, and water bills increase. An ONS survey found that nearly half of UK businesses are considering price hikes, preparing for tax rises and a higher National Living Wage next month. Hargreaves Lansdown’s Susannah Streeter said the Bank of England is unlikely to cut rates just yet, with a rate cut more likely in June or later in the year. Chancellor Rachel Reeves is set to deliver her Spring Statement, where she is expected to announce welfare cuts and a downgrade to growth forecasts. With concerns growing over stagflation, opposition parties are calling for urgent action to support struggling families as economic growth continues to stagnate.
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