Slump in clothes prices causes surprise UK inflation dip – Reuters

Slump in clothes prices causes surprise UK inflation dip – Reuters

LONDON (Reuters) - British inflation unexpectedly fell last month, reflecting the biggest annual drop in clothing prices since 2009 and cheaper second-hand cars, toys and computer games, though most economists see sharper price rises ahead.The annual rate of consumer price inflation dropped to 0.4% in February from 0.7% in January, the Office for National Statistics said, in contrast to economists' average forecast in a Reuters poll of a rise to 0.8%.“The impact of the pandemic has disrupted standard seasonal patterns,” ONS Deputy National Statistician Jonathan Athow said. “A fall in clothing prices helped to ease inflation in February, traditionally a month where we would see these prices rise.”Sterling weakened slightly against the U.S. dollar after the figures came out.The Bank of England and others expect inflation to rise sharply back towards the BoE's 2% target in the first half of this year, reflecting higher oil prices, increases in regulated household energy bills and other one-off effects.“From April we'll also see the headline rate of inflation leap on energy prices, partly because we'll no longer be comparing petrol prices to pre-pandemic levels, but also because the household energy price cap will rise to 9%,” ING economist James Smith said.Few economists expect