UK Inflation Fell In Feb In Contrast To Forecasts

FEB CPI +0.1% M/M, +0.4% Y/Y VS +0.7% Y/Y JAN

FEB CORE CPI 0.0% M/M, +0.9% Y/Y VS +1.4% Y/Y JAN

FEB OUTPUT PPI +0.6% M/M; +0.9 % Y/Y VS +0.1% Y/Y JAN

FEB INPUT PPI +0.6% M/M; +2.6% Y/Y VS +1.6% Y/Y JAN

The headline annual CPI ticked down in Feb to 0.4%, below market median predictions (0.8%) and marking the lowest level since Nov. This marks the 19^th straight reading below the BOE's 2.0% target. Core inflation edged down to 0.9% in Feb, coming in weaker than expectations (1.4%) as well. The divergence of seasonal patterns, especially for clothing, led to the decline in Feb. The largest downward contribution came from clothing and footwear, shaving off 0.17pp from CPI growth. Prices for these products would traditionally rise in Feb following Jan discounting due to winter sales, the ONS noted. However, this year discounting continued due to the pandemic. The biggest upward contribution was seen from transport, adding 0.04pp to price growth. The ONS noted that prices at the pump increased in Feb, in contrast to declines recorded in the previous year at this time. Output inflation ticked up to 0.9%, while input inflation rose to 2.6%.