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What's going on with inflation
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Well, once again, inflation has dropped more than economists had predicted, falling to a headline 3.4% rather than the expected 3.6%
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Figures from the Office for National Statistics, or the ONS, revealed that last month inflation fell to its lowest levels in 2.5 years, dropping by 4% from the month before
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which has started raising questions for the Bank of England ahead of its latest interest rate decision
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Grant Fisner, chief economies at the O&S, said, Food prices were the main driver of the fall
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with prices almost unchanged this year compared with a large rise last year
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while restaurants and cafe price rises also slowed. This helped the offset increases in patrol prices and rental costs
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Core inflation, which strips out volatile components such as food and energy
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dropped to 4.5% from 5.1% in January. Services inflation, which the bank has identified as a key gauge of domestic inflationary pressures, fell to 6.1% from 6.5% in January
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Chancellor Jeremy Hunt said, the plan is working. Inflation has not just fallen decisively but is forecast to hit the 2 target within months The figures come just a day before the Bank of England announces its late decision on interest rates Having peaked at over 11 in October 2022 inflation has fallen much more rapidly than economists
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expected as the impact of the energy price shock has receded. Despite this, the bank is likely to leave rates on hold when it meets tomorrow
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Alongside progress on inflation, policymakers are looking for further easing in wage pressures
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Rate setters are concerned that stubborn wage growth, which remains at more than twice the level consistent with the bank's 2% inflation target
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could prevent inflation returning to target. Earlier this month, Hugh Pell, the bank's chief economist, warned that rate cuts were still
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some way off, reflecting the approach taken by central banks around the world
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The European Central Bank left rates on hold at its most recent meeting, with Christine Legarde
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saying policymakers will not yet sufficiently confident to cut rates. The Fed will announce its latest decision
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later this evening. Markets think the bank will start cutting rates in the summer
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with June the earliest likely date. However, this morning's figures could bring forward the start date for rate cuts. We here at City End would like to
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know what are your predictions. Do you think the Bank of England will cut
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interest rates? Let us know your thoughts in the comments below and like and subscribe for more
