UK Inflation Falls but is Looking Stubborn Again

Published / Last Updated on 20/03/2024

UK Consumer Prices Index (CPI) Inflation falls to 3.4% in February 2024 down from 4% pa.

The Office for National Statistics (ONS) released Consumer Prices Index (CPI) inflation figures today for February 2024, and has fallen from 4.0% pa (December 2023 and January 2024) to 3.4% pa in February 2024.  This is a fall of nearly 50% compared to September 2023 at 6.7% pa.

CPI was up 0.6% for the month of February with the ONS suggesting the largest downward contributors to the monthly change CPI rate came from food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels.

RPI Falls Again

The old measure of inflation RPI, an arithmetical mean of the average prices of a basket of household spending (rather than the geometric mean for CPI) and still our preferred measure of real inflation, fell again from 4.9% pa to 4.5% pa.  RPI has fallen consistently over the last few months and is now 4.2% pa lower than it was in September 2023, this is a dramatic shift in overall cost increases in just 5 months.


RPI is no longer an official government statistic but given state pension increases, some state benefits, and index linked gilt yields (government debt repayments) are linked to RPI, this will be welcome news to the Treasury.

On a positive note, we are now in an unusual position that you can earn over 5% pa on cash deposit savings, but inflation is lower.  This is a prime opportunity to lock into fixed rate deposit accounts as the £ in your pocket is worth more than it was. 

That said, April sees many increases to our bills with increases due of ‘X % plus inflation’ on things like mobile telephone, subscription-based TV and streaming services.  Housing costs , mortgages and fuel are also still climbing meaning that for the month of February alone, CPI was 0.6%. 

If we were to annualise this and 0.6% per month increases prevailed for the whole year, this would be 7.2% pa, so we are far from being ‘out of the woods’ yet.  With these points in mind, we expect inflation to remain a little more stubborn for the next few months and cannot see the Bank of England cutting interest rates tomorrow.

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