INFLATION remained well above target in February, despite falling for the fifth consecutive month, official figures showed yesterday.
However, there may be some good news for the government today as the Office for Budget Responsibility is expected to upgrade its GDP growth forecasts on recent strong data.
Consumer prices (CPI) rose by 3.4 per cent on the year, the Office for National Statistics revealed – substantially higher than the Bank of England’s two per cent target.
Inflation was last below two per cent in November 2009, and hit a high of 5.2 per cent in September.
Electricity prices fell 1.3 per cent in the month and gas prices dropped 0.9 per cent, dragging down inflation, though they remain up 10.1 and 17.2 per cent respectively on the year.
Air travel fares also fell 1.6 per cent in the month, weighing on the headline figure, though they remain up 5.7 per cent compared with last February.
The cost of living measured on the retail price index (RPI) rose by 3.7 per cent in the year, slowing from 3.9 per cent in January and 5.6 per cent in September. The tax and price index, which takes into account the impact of direct taxation, slowed to 3.3 per cent from 3.6 per cent a month earlier.