The rate of inflation in the UK slowed to 2.8% in the 12 months to February, the Office for National Statistics (ONS) has revealed.

This compares to consumer price index (CPI) inflation increasing by 3% in the year to January.

On a monthly basis, inflation increased by 0.4% in February, compared to a rise of 0.6% in February 2024.

The ONS revealed that this is the first drop in annual CPI inflation since December 2024, which fell slightly from 2.6% in November to 2.5%.

The news comes after the Monetary Policy Committee (MPC) voted to keep the base rate at 4.5% earlier this month.

Analysts have stated that this drop in inflation is some "good news" ahead of the Spring Statement.

However, chief executive officer at Just Mortgages and Spicerhaart, John Phillips, said that this may be a "blip", ahead of increases to employers’ National Insurance contributions and other tax rises.

He continued: "Economists suggest September as the peak for inflation and remain confident that inflationary pressures will eventually subside and return to the 2% target. As we’ve seen though, predicting inflation can be a fool’s errand – particularly in this economic climate. All eyes will be on the MPC to see how it responds to this changing picture. While its gradual and careful approach is important and works to a point, we also need decisive action to safeguard the economy and support the key drivers of economic growth."

Chief client experience officer at Aberdeen Adviser, Jonny Black, added: "Inflation may have dipped, but the road ahead is anything but smooth, and the Bank of England still expects it to peak at 3.7% by summer. And, in such volatile conditions, sudden shocks in the global economy could push this higher, faster.

"Investors and savers shouldn’t be complacent and financial advisers will continue to play a vital role in helping people achieve their financial goals. The cost-of-living squeeze is far from over, and those sitting on cash savings risk watching their money gradually lose value in real terms. Considering seeking a higher return for those funds – potentially by investing in non-cash assets – will be important for keeping ahead of inflation’s bite."

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