UK inflation holds steady at 3% ahead of war in the Middle East

(Sharecast News) - UK inflation was unchanged in February, official data showed on Wednesday, in line with forecasts. According to the Office for National Statistics, the consumer prices index in the 12 months to February showed no change on January, at 3%.

The largest upward driver was the price of clothing, which jumped 0.9% compared to no change a month earlier. But that was offset by falls in the cost of petrol ahead of war starting in the Middle East.

Grant Fitzner, chief economist at the ONS, added: "A fall in the cost of alcoholic drinks due to promotional activity, compared with a rise last year, was also a downward driver, while little change in food prices - again compared with a small rise this time last year - added further downward pressure."

However, core CPI, which strips out the more volatile prices of energy, food, alcohol and tobacco, edged up to 3.2% from 3.1%.

The data predates the US attacks on Iran at the end of February, which sent global energy prices soaring as the conflict spread through the region and the Strait of Hormuz, a vital shipping route, ground to a virtual halt.

The Bank of England had previously forecast that inflation would fall to 2.1% in the second quarter of this year, towards its long-term 2% target. Interest rate cuts had been widely priced as a result.

However, the rate-setting Monetary Policy Committee left the cost of borrowing on hold at its March meeting, in response to the war, and said it was "ready to act" to keep inflation under control.

CPI including owner occupiers' housing costs (CPIH) rose by 3.2% in February, also unchanged on January.