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UK inflation fell back to 2.8% in February, giving a boost to Chancellor Rachel Reeves before her spring budget later today.
Alcohol and tobacco were some of the biggest risers, up 5.7% over the past 12 months, while food inflation remained steady at 3.3%.
“Clothing prices, particularly for women’s clothes, was the biggest driver for this month’s fall,” said Grant Fitzner, the ONS chief economist. “This was only partially offset by small increases, for example, from alcoholic drinks.”
It is a minor boost for Reeves, with the rate coming in below expectations of 2.9%. However, inflation is expected to climb again from next month as rising household bills combine with additional expenses for businesses on National Insurance and wages.
“February’s slowdown is a false dawn as notable near-term price rises are already baked in,” said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales. “Next month’s jump in energy bills and National Insurance [are] likely to push inflation perilously close to 4% sooner rather than later.”
The Bank of England expects inflation to peak at around 4% in September but ease back to around 2% by the start of next year.
New taxes and regulations have led to a major fall in confidence inside the food industry, according to a survey released by the FDF today, which found confidence is at its lowest ebb since the end of 2022 when inflation was sky high and the war in Ukraine had recently begun.
Morning update:
Virgin Wines has launched a new plan to “turbocharge” growth over the next five years as it looks to put its excess cash to good use.
By 2030, the company is hoping the strategy will deliver £100m in annual revenue – up from £59m currently – at a profit margin of 7%.
The strategy is based on four goals: investing in new technologies, expanding its commercial relationships, investment in Warehouse Wines, and acquiring new customers.
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