London, March 20 – The United Kingdom's Consumer Price Index (CPI) recorded a year-over-year increase of 2.8% in February, slightly below the anticipated 2.9%, according to data released by the Office for National Statistics (ONS) on Wednesday. This marks a decline from January’s 3.0% inflation rate but remains above the Bank of England’s (BoE) 2% target. Economic Calendar 26/03/25

  The core CPI, which excludes volatile items such as food and energy, rose by 3.5% annually, easing from January’s 3.7% and falling short of the market projection of 3.6%. Meanwhile, services inflation held steady at 5% on a yearly basis. On a monthly scale, UK inflation rebounded to 0.4% in February following a 0.1% decline in January. Analysts had forecast a 0.5% increase for the month.

Market Impact

The latest inflation data exerted downward pressure on the British pound, with GBP/USD slipping 0.15% below the 1.2950 mark. The report’s release has fueled speculation regarding the BoE’s future monetary policy, as investors assess potential interest rate adjustments in response to inflation trends. The inflation figures are expected to play a key role in shaping market sentiment and influencing the BoE’s stance on interest rates. While the downward trend in inflation suggests some relief, the figures remain elevated compared to the central bank’s target, keeping market participants attentive to forthcoming economic data and policy decisions.