Inflation slows slightly in February

Inflation fell to 2.8% last month, down from 3% in January.

The figure is lower than analysts had expected but remains above the Bank of England’s target of 2%.

According to the Office for National Statistics (ONS), February’s lower inflation figures were driven by a fall in the price of women’s clothes.

This was offset by price rises in other areas, though, such as alcoholic drinks.

The fall in inflation could be short-lived, with economists expecting the measure to start rising again from next month. Experts believe inflation could reach 3.7% by the end of the year, driven by higher energy prices and wage increases.

It remains to be seen what this will mean for interest rates.

The Bank of England held the rate at 4.5% when it last met on 20 March following a 0.5% cut in February.

What is inflation

Inflation is when prices rise over time. A little inflation is normal and shows the economy is growing. But too much inflation can make things expensive and hard to afford. Inflation happens for different reasons, like high demand, low supply, or government policies.

How is inflation measured?

Inflation is measured by tracking the prices of everyday goods and services over time. The Office for National Statistics (ONS) uses something called the "basket of goods." This basket includes items like food, fuel, and rent. If the prices of these things go up, inflation is rising. If they stay the same, inflation is stable. This helps show how much the cost of living is changing.

What inflation means for your money

Rising inflation means prices go up, so people need more money to buy the same things.

The Bank of England controls inflation by changing interest rates.

When inflation is too high, they raise interest rates. This makes borrowing more expensive and encourages people to save instead of spend. With less spending, prices rise more slowly.

When inflation is low, they cut interest rates. This makes borrowing cheaper and saving less rewarding, so people spend more, helping prices rise at a steady rate.

The Bank of England’s goal is to keep inflation around 2% to keep the economy stable.