With Governor Mark Carney warning about worldwide risks to the United Kingdom economy, weak price growth is giving him leeway to keep interest rates at a record low.
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United Kingdom base rates have been at 0.5 per cent since March 2009.
Falling prices for transport costs, food and non-alcoholic beverages and to a lesser extent recreational and cultural goods and services have had a downward pull on the rate of inflation.
A sharp fall in the rand currency and the worst drought in a century pushed food prices higher, taking the consumer price index up from January’s annual rate of 6.2 percent.
While inflation held at the same level as last month, Samuel Tombs, the chief United Kingdom economist at Pantheon Macroeconomics believes that it is just a “pause” in a continuing upward trend.
In response, FSB national chairman Mike Cherry, said: “Small business confidence has faltered and is now at its lowest level since 2013, reflecting the challenging economic outlook and significant policy challenges on the horizon”.
On a monthly basis, consumer prices went up 1.4 percent at the start of the year, following a 0.8 percent increase in the preceding month.
Clothing prices were up 0.4% compared with a year earlier, while gas prices were down 6% over the same period following energy giant E.ON’s move to cut the cost of gas by 5.1% for two million customers last month.
Transport increased from 0.9 of a percentage point in January to 1.3 percentage points in February.
Figures from the ONS show the Retail Prices Index measure of inflation remained at 1.3% last month.
On the month, consumer prices rose 0.2 percent in February, less than economists had forecast.
Economists polled by Reuters had expected CPI to come in at 6.7 percent in February.
But the continued weakness of inflation means there is no immediate pressure on the Bank of England to raise interest rates from 0.5%, where they have been pegged for the past seven years.
The Office for Budget Responsibility also slashed its growth forecasts for the United Kingdom economy in Chancellor George Osborne’s Budget amid concerns over slowing global growth.
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He added that oil and petrol prices need to rise a lot more in order to push inflation upwards.
