UK inflation dips as virus curbs spark discounting by retailers

[LONDON] Britain's annual inflation rate dipped in February as coronavirus restrictions sparked heavy discounting by retailers, particularly for clothing and footwear, official data showed Wednesday.

The rate, as measured by the UK's Consumer Prices Index (CPI), slowed to 0.4 per cent last month from 0.7 per cent in January, the Office for National Statistics said in a statement.

Market expectations had been for a decline to 0.8 per cent.

"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," said ONS statistician Jonathan Athow.

Much of the UK re-entered lockdown in early January to curb a winter surge in Covid-19 infections and deaths.

Prime Minister Boris Johnson's government is now targeting a phased reopening on the back of a successful vaccine drive.

Wednesday's data came one week after the Bank of England had warned that the inflation rate would approach its 2.0-per cent target level in the coming months due to energy price hikes.

The BoE also left record-low interest rates at 0.1 per cent last Thursday and forecast economic growth would recover towards pre-Covid levels this year.

AFP