United Kingdom inflation dips to 2.7 per cent in February

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"February's reading of 2.7% was slightly lower than expectations and 2.5% for underlying inflation is in line with forecasts".

United Kingdom transport prices dragged on the cost of living in February, securing a smaller month-on-month rise of 0.5% in contrast to a 1.2% jump a year ago.

In the latest United Kingdom inflation figures, the Consumer Prices Index (CPI) has dropped to 2.7 per cent in February - from 3 per cent in January, suggesting the squeeze on households may be ending.

The ONS said that a small fall in petrol prices alongside food prices rising more slowly than a year ago helped pull down inflation, as numerous early 2017 price increases due to the previous depreciation of the pound have started to work through the system.

"Core inflation probably fell back too, from 2.7% in January to 2.5%, which is likely to mark the beginning of a more sustained downward trend in inflation this year".

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The rand traded steady at around R12 to the U.S. dollar after the release of the data, as the worldwide market remains the driver now, said TreasuryONE dealer Wichard Cilliers.

Gilt futures also gained marginally. The central bank has signalled that it wants to see wage pressures building before it hikes rates. The Brexit referendum pushed down the pound, in turn hiking the cost of imported goods.

The outcome was lower than the 2.8% predicted by economists and marked the first fall in inflation since December 2017.

Any actual decline in inflation could elicit a negative response from the Pound Tuesday, as markets question the necessity of another Bank of England interest rate rise in the near future.

"As a result, we still think that the MPC will raise interest rates... in May", they added.

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