UK consumer price inflation eased unexpectedly in February driven by falling prices of clothing, second-hand cars and games, data from the Office for National Statistics revealed on Wednesday.

Consumer price inflation eased to 0.4 percent from 0.7 percent in January. The rate was forecast to rise to 0.8 percent.

Month-on-month, consumer prices edged up 0.1 percent, in contrast to January’s 0.2 percent fall. This was weaker than the economists’ forecast of 0.5 percent.

Clothing and footwear prices dropped 1.5 percent on month due to increased discounting. Downward contributions to inflation also came from traditional toys and computer games.

Excluding energy, food, alcoholic beverages and tobacco, core inflation eased to 0.9 percent in February from 1.4 percent in January.

The drag on consumer price inflation in February from the COVID-19 lockdown will delay the rebound in inflation to 2.0 percent and perhaps prompt the markets to reconsider their view that interest rates will rise next year, Paul Dales, an economist at Capital Economics, said.

Another report from ONS showed that output prices increased for the second month in a row and was the highest annual rate since August 2019.

The annual rate came in at 0.9 percent versus +0.1 percent in January and the expected rate of 0.3 percent. The largest upward contribution to output price inflation came from food products and other manufactured products.

Month-on-month, output prices grew 0.6 percent, faster than the 0.8 percent rise in January. Economists had forecast the rate to ease to 0.3 percent.

At the same time, input price inflation accelerated to 2.6 percent, in line with expectations, from 1.6 percent in January.

On month, prices grew 0.6 percent after climbing 1 percent a month ago. Prices were expected to gain 0.7 percent.

Another report from the ONS showed that average house price inflation eased to 7.5 percent in January from 8 percent in December.

On a monthly basis, house prices decreased 0.5 percent versus a 0.1 percent rise in the same period a year ago.

The material has been provided by InstaForex Company – www.instaforex.com

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