UK CPI rises by 0.3% in February, remains unchanged year-on-year

Inflation in the UK fell to zero in February, as lower food prices and computer goods left consumer prices unchanged from the previous year for the first time since record began.

According to figures released by the Office for National Statistics, consumer price inflation declined from an annual rate of 0.3% in January to 0.0% last month, a level unseen since comparable records began in 1989.

The main driver in the decline was a drop in the core rate from 1.4% to 1.2%, which reflected the indirect effects of lower energy prices.

The decline was slightly higher than the 0.1% reading economists had expected and analysts expect inflation to fall further, particularly once the cut in energy prices by the main providers will show in the inflation figures.

Capital Economics’ chief UK economist Vicky Redwood, said inflation was likely to remain around zero or slightly negative for the rest of the year, though she added she was doubtful about the chances of a more serious and engrained deflation.

“We still think that deflation in the UK will be a ‘good’ development, giving households’ incomes a welcome boost and supporting the economic recovery this year,” said Redwood.