Britain's 12-month inflation rate slowed in February to a 15-month low point on the back of falling domestic electricity and gas bills, official data showed on Tuesday. Annual Consumer Prices Index (CPI) inflation retreated last month to 3.4 percent, the Office for National Statistics said in a statement.
That was the lowest level since November 2010 and compared with 3.6 percent in January. The CPI inflation rate was also pulled lower by cheaper flights and heavily discounted digital cameras, but this was partly offset by a record monthly rise in alcohol prices.
"The largest downward pressures to the change in CPI annual inflation between January and February came from domestic electricity and gas, recreation and culture, and transport," the ONS added in data published a day before the government's annual budget. The February figure compared with market expectations for a drop to 3.3 percent, according to analysts polled by Dow Jones Newswires.
The Bank of England had forecast last month that annual CPI inflation would fall under its government-set target of 2.0 percent in the final quarter of 2012, before reaching as low as 1.5 percent next year. Chris Williamson, chief economist at financial services information firm Markit, said the BoE's forecasts may prove "optimistic" as high oil prices present the "biggest headache" to inflation in the months ahead. The ONS meanwhile also said on Tuesday that CPI inflation increased by 0.6 percent in February from January on a month-on-month basis. Analysts' expectations had been for a 0.5-percent gain.
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