By Milcah Tanimu

Official data released on Wednesday revealed that Britain’s annual inflation rate plummeted to 3.4 percent in February, marking the lowest level since September 2021. This significant decline, down from January’s 4.0 percent, has sparked speculation that the Bank of England (BoE) might consider cutting interest rates later this year.

The Office for National Statistics reported that consumer prices had been expected to rise by 3.5 percent in February, according to a Bloomberg survey, making the actual figure slightly lower than anticipated. However, inflation still remains notably above the BoE’s two-percent target.

While the BoE is expected to maintain its main interest rate in the announcement scheduled for Thursday following its regular monetary policy meeting, analysts foresee the possibility of a rate cut as early as June.

Grant Fitzner, chief economist at the ONS, attributed the decline in inflation primarily to stable food prices, which contrasted with a significant rise observed last year.

Finance minister Jeremy Hunt welcomed the news of declining inflation, noting that it is forecasted to reach the two-percent target in the coming months. He emphasized that this development sets the stage for improved economic conditions, potentially facilitating progress in boosting growth. However, Hunt cautioned against increasing borrowing or reducing funding for public services to finance tax cuts, especially in the context of an upcoming general election where his Conservative party is projected to face challenges from the main opposition Labour.