Investing.com - U.K. inflation advanced less than expected in February, providing something of a relief to Chancellor Rachel Reeves as she prepared to deliver her last Spring Statement to parliament.
Annual consumer price inflation rose 2.8% in February, below the 3.0% seen the prior month, below expectations but still considerably above the U.K. central bank’s 2.0% medium-term target.
The monthly rate rose 0.4%, above the 0.1% decrease seen in January.
Analysts had expected the CPI to rise 3.0% on an annual basis, and 0.5% on the month.
Core CPI, which excludes volatile energy and food prices, rose 0.4% on a monthly basis, with the annual rate at 3.5%, from 3.7% in the prior month.
This news comes as Chancellor Rachel Reeves is set to deliver her latest fiscal update to parliament, with further cuts to welfare benefits and government departments expected in her Spring Statement.
The government announced big welfare spending reductions last week, but the chancellor is set to expand the cuts after being told reforms to the system would save less than planned.
Reeves is also expected to announce an additional £2.2 billion pounds for defence spending as the major European countries scramble to boost regional security.
The UK’s economic performance has been pretty lacklustre for the past few years, with low growth and rising prices.
Last month, the Bank of England halved its growth forecast, and the government’s independent forecaster the Office for Budget Responsibility is also likely to downgrade its growth prediction today.
Even with the cut to its growth forecast, the Bank of England maintained its key interest rate at 4.5% last week, and warned that economic and global trade uncertainty has "intensified", with U.S. trade tariffs and retaliation to the import taxes from the likes of the EU creating a great deal of uncertainty.
Economists are predicting two more rate cuts by the end of the year, with many suggesting the next could come in May.