UK Inflation Rate Slows to 4-Year Low


In February of 2014, UK’s annual consumer prices eased to 1.7 percent, the lowest rate since October of 2009, dipping further below the Bank of England's target. The biggest downward contribution was transport cost, mainly fuel prices, which showed its biggest drop since September 2009.

The largest downward pressures came from transport prices (overall, rose by 0.3 percent between January and February 2014 compared with a rise of 1.2 percent between the same two months a year earlier). 

Within the transport sector, the main downward effect came from motor fuels. Petrol prices fell by 0.8 pence per litre between January and February this year compared with a rise of 4.0 pence per litre between the same two months a year ago. Similarly diesel prices fell by 0.8 pence per litre this year compared with a rise of 3.7 pence per litre a year ago. There was also a smaller downward contribution from air transport where fares rose between January and February but by less than a year ago. These effects were partially offset by a small upward contribution from second-hand cars.

Prices of housing and household services rose by less than a year ago. The effect came almost entirely from gas and electricity where there was a combination of price rises and reductions resulting from changes to the Energy Companies Obligation scheme this year. This compared with price rises a year ago.

Cost of clothing and footwear rose, as usual, between January and February but by less than in 2013. The downward effect came principally from garments, particularly men’s and women’s outerwear.

The largest upward contributions came from furniture, household equipment and maintenance prices (2.4 percent) and recreation and culture.

The CPI rose by 0. 5 percent between January and February of 2014, compared with a larger rise of 0.7 percent between the same two months in 2013.


UK Inflation Rate Slows to 4-Year Low


ONS | Joana Taborda | joana.taborda@tradingeconomics.com
3/25/2014 11:47:34 AM