**MNI 5 Things: CPI Slows More Than Expected; Dilemma For BOE

By Jamie Satchithanantham and Laurie Laird

     **LONDON (MNI) - The following are the key points from the ONS' inflation

data published Tuesday by the Office for National Statistics.

     - Falling consumer inflation poses a potential dilemma for the Bank of

England's Monetary Policy Committee. CPI remained above the Bank's 2.0% percent

target for the twelfth straight month, but fell to an annual rate of 2.7%, the

slowest rate since July 2017. Bank of England staff had predicted a fall to just

2.9% in February.

     - A dramatic decline in intermediate inflation -- producer input prices

rose by just 3.4%, the lowest rate in over two years -- suggests further easing

of consumer price pressures in months to come.

     - The February inflation result fell well short of analysts' expectations,

highlighting the precipitous decline in consumer inflation. Historically,

analysts tended to underestimate the change in CPI in the month of February.

     - Food and transport, both of which are sensitive to exchange rates,

accounted for much of the decline in consumer inflation. The sterling effective

exchange rate rose by 1.8% in the year to February, after falling by an annual

rate of 10.5% a year earlier.

     - Unusually, the February outturn included a Valentines Day effect. In

2017, data were collected on 14 February when prices for hotels and ferry

tickets may have been artificially elevated. Restaurants and hotels subtracted

0.08 percentage points from overall CPI this February, the second largest mover

behind transport.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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