Inflation falls slightly easing pressure on households – what it means for your money
THE UK’S rate of inflation has fallen n February.
The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measured 2.8% in the 12 months to February.
This is compared to a reading of 3% in the 12 months to January, the highest the figure reached in 10 months.
Experts at the ONS said the fall was helped by a drop in women’s clothing prices.
However this was offset slightly by a rise in the cost of alcoholic drinks.
Inflation is a measure of how much the prices of everyday goods such as food and clothes, and services such as train tickets and haircuts, have increased compared to a year earlier.
When inflation rises it means prices are going up at a faster pace than the month before.
Today’s figures is still above the Bank of England’s target of 2%.
Meanwhile, inflation is expected to hit 3.7% in the summer, driven by increases in the price of energy and food.
The ONS’s latest data also reveals core CPI inflation, which strips out energy, food, alcohol and tobacco, rose 4.4% in the 12 months to February 2025, down from 4.6% in the 12 months to January.
Elsewhere, the rate at which the cost of food and groceries increase remained the same 3.3%.
Grant Fitzner, chief Eeonomist at the ONS, said: “Clothing prices, particularly for women’s clothes, was the biggest driver for this month’s fall.
“This was only partially offset by small increases, for example, from alcoholic drinks.”
Today’s inflation drop comes just hours before Chancellor Rachel Reeves will unveil her Spring Statement.
The head of finance for the UK is expected to announce further spending cuts to Government departments in a bid to balance the books.
She is also expected to reveal the impact of £5billion worth of spending cuts to the UK’s welfare system.
WHAT IT MEANS FOR YOUR MONEY
Falling inflation is often good news for households, but experts have warned that many Brits are not out of the woods yet.
Next month millions across the UK will be have to absorb a raft of hikes from higher energy, water and broadband bills to rises in council tax, car tax and stamp duty.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said that April will be a “crunch month” for personal finances.
She explained that reviewing household budgets will be a “key strategy” for households to ensure they are “fully prepared for the uptick in bills”.
“Cutbacks may be necessary to avoid paying bills on credit cards or running up overdrafts to make ends meet.”
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.