Inflation slows in February amid falling clothes prices and rising fuel costs Leave a comment

INFLATION slowed down in February amid falling clothes prices and rising fuel costs, according to new figures.

The Consumer Price Index (CPI) rose by 0.4% in the 12 months to February this year, reports the Office for National Statistics (ONS).

The 12-month inflation rate eased between January and February 2021


The 12-month inflation rate eased between January and February 2021

But over the year, CPI was down from a 0.7% rise to January and 0.6% rise in December.

The coronavirus crisis again wreaked havoc on the rate of inflation as England, Scotland and Wales were all plunged into a third national lockdown.

During this time, businesses including pubs and non-essential retail have had to temporarily close to curb the spread of Covid-19.

Falling prices of clothes, second-hand cars and toys were one of the leading reasons behind the slow-down.

What does inflation matter?

INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.

Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.

The government sets an inflation target of 2%.

If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.

High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.

Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.

But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.

See our UK inflation guide and our Is low inflation good? guide for more information.

Prices typically rise between the first two months of the year as post-Christmas sales tend to end in January.

But this year, clothing and footwear prices fell by 1.5% between January and February, compared to a 0.9% rise in 2020. Womenswear was hit the hardest.

One of the biggest drivers of the small rise was fuel prices, which have increased over the past month compared with a fall seen last year.

Petrol prices rose by 3.6p a litre to 120.2p per litre, while diesel costs went up by 3.4p per litre to 124.6p per litre.

In comparison, between January and February 2020, petrol and diesel prices fell by 2.4p and 3.2p per litre, to stand at 124.5p and 129.3p per litre, respectively.

ONS deputy national statistician for economic statistics Jonathan Athow said: “A fall in clothing prices helped to ease inflation in February, traditionally a month where we would see these prices rise, but the impact of the pandemic has disrupted standard seasonal patterns.

“Elsewhere there were falls in the price of second-hand cars.

“However, prices at the pump rose this month, compared with a fall this time last year.”

More to follow…

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