UK inflation cools to 3.4% amid service inflation slowdown

UK inflation rate cooled to 3.4% in February while core inflation also slowed to 4.5%, compared to a year earlier. Both figures are lower than market expectations.

• both headline and core rate, which strips out the prices of food and energy, rose 0.6% during the month.

Service inflation, one of the major focuses of Bank of England, continued its decline to 6.1% in February,

• the number is an exact match to Bank of England’s forecast, shown in its latest Monetary Policy Report.
• The Bank is predicting a further decrease in service prices, with the annual rate drops to 5.3% in April.

While disinflation is the major theme of the report, the yearly rate of rent CPI was marching higher,

• 6.9% increase in rent, highest level since Feb 1994
• monthly rate of increase maintained at an elevated level of 0.6%