Inflation Falls

Published / Last Updated on 20/03/2018

Consumer Spending SlowdownInflation Falls to 2.7 Per Cent.

The Office for National Statistics has released inflation figures for February 2018 with headline CPI inflation falling to 2.7% pa and the old measure of inflation, RPI, falling back 3.6% pa.

Inflation + Housing Costs CPIH

The Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate fell from 2.7% pa to 2.5% pa.  This is known as CPIH and a benchmark we believe that now includes owner occupier housing costs as mortgage interest rates are low.  This is not CPI but CPIH.

Consumer Prices Inflation CPI

The Consumer Prices Index (CPI) fell from 3.0% pa to 2.7% pa.  This is a key Bank of England (BoE) number and relieves pressure on the Bank of England to increase interest rates.

Retails Prices Index (RPI) – the old measure of inflation

RPI was also down from 4.0% pa to 3.6% pa.  Although this is no longer an official 'National Statistic', it certainly relieves pressure on the Bank of England to increase interest rates and strengthen the £ as imported food and goods price increases have slowed a little.


The Office for National Statistics suggests that the decrease was due to fuel prices falling globally.  The £pound had already strengthened earlier this week and last on the back of stronger than expected economic figures in the UK Spring Statement.  That said, developed stockmarkets in UK, US, Europe and the Far East (particularly Japan) have fallen this week on the anticipation that central banks will increase interest rates later this week.  We still have fears of higher interest rate increases and certainly rises will hit stock markets.