UK inflation rate unexpectedly drops in February

LONDON (Reuters) – British consumer price inflation unexpectedly fell to 0.4% in February from 0.7% in January, reflecting unusual patterns of clothing discounts, official figures showed on Wednesday.

The Bank of England and other economists expect inflation to rise sharply back towards the BoE’s 2% target in the first half of this year, reflecting a rise in oil prices, increases in regulated household energy prices and other one-off effects.

Wednesday’s data from the Office for National Statistics showed that producer prices – which tend to feed through into consumer prices later – were 2.6% higher than the year before in February.

Core consumer price inflation – which excludes more volatile food and energy prices – dropped to 0.9% from 1.4%.

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