UK inflation ticks up marginally in February
February’s reading was underpinned by higher prices for food and non-alcoholic beverages; clothing and footwear; and furniture, household equipment and maintenance.
Inflation inched up from 1.8% in January to 1.9% in February but remained marginally below the Bank of England’s (BoE) 2.0% target.
Core inflation—which excludes food and energy costs—was also slightly below 2.0%.
Looking ahead, inflation is likely to stay close to the BoE’s target, with the tight labor market providing upward pressure.
The outcome of the Brexit process is a key risk to the inflation outlook, as a no-deal Brexit could lead to a sharp currency depreciation and fan price pressures, even in the face of weaker domestic demand.
According to the February Inflation Report, the Bank of England sees inflation at 2.0% in Q4 2019 and 2.1% in Q4 2020.
FocusEconomics Consensus Forecast panelists expect inflation to average 2.0% in 2019 and 2.0% again in 2020. ■