UK inflation has gone down more than forecare to 2.8%, the latest Office for National Statistics (ONS) reveals.

This comes after inflation increased to 3% in January from 2.5% the month prior.

The largest downward contribution to the monthly change came from clothing, with a further large downward effect in consumer prices index including owner occupiers’ housing costs from housing and household services.

Last week, economists predicted that the cost of living would stay at 3% driven by rises in food and drink.

On 20 March, the Bank of England voted to maintain the interest rate at 4.5% in the face of higher wage demands and trade uncertainty brought by a global tariff war sparked by US President Donald Trump.

Rate-setters at the Bank’s Monetary Policy Committee voted 8–1 to hold, with external member and long-time dove Swati Dhingra pushing for a quarter-point cut.

Policymakers reiterated their “gradual and careful approach” in the minutes of the March decision.

It said, “greater or longer-lasting weakness in demand relative to supply” could push down inflation and lead to further cuts.

But a “more constrained supply relative to demand and more persistence in domestic wages and prices” would lead to tighter monetary policy.

Today’s unexpected data has been published ahead of Chancellor Rachel Reeves’ spring statement.

MPowered Mortgages head of product Peter Stimson says: “If nothing else this will give the Chancellor one less thing to worry about as she braces for the backlash from today’s Spring Statement.”

“But while both the headline rate of inflation, and the more telling core rate of CPI, have eased off, they’re still higher than both the Chancellor and the Bank of England would like.”

“Any breather could be temporary, as April will bring an inflationary boost for households in the form of higher Council Tax bills and for businesses in the form of a surge in the cost of hiring people. April is also likely to see many firms agreeing annual pay rises, in many cases above inflation.”

“The inflationary shadow which has shrouded the UK economy for the past three years has lightened but not lifted. Things may get worse before they get better.”

“The question now is at what point might cooling inflation prompt the Bank of England to unleash its next base rate cut.”

“While CPI is still well above the Bank’s 2% target, economic growth is a major worry. The economy slipped into reverse in January and the OBR is today expected to slash its growth forecast for 2025, so it may take only one more month of easing inflation for the Bank to resume its rate-cutting.”

“At present the swap markets are pricing in two more base rate cuts for 2025, but with the economy stagnating, the Bank could be tempted to cut faster. A base rate below 4% by Christmas is possible – and this at least will be welcome news for the 1.8 million households due to remortgage this year.”

L&C Mortgages associate director David Hollingworth says the attention will be on the Chancellor’s spring statement.

Hollingworth comments: “With cuts to spending widely anticipated, the surprise easing in the rate inflation in February will be welcome news.”

“Although a slight reduction in the rate of inflation had been expected, today’s figures have outstripped expectations.”

“That can have positive implications for mortgage rates if it helps to boost the market’s outlook for interest rate movements.”

“Today’s news may not do enough to materially shift the forecasting though and although this should undoubtedly be seen as good news, it’s widely anticipated that the rate of inflation will lift again in coming months.”

“The rate is still appreciably higher than the Bank of England’s target rate. With further rises to come, the message for interest rates is likely to remain one of rate cuts being on the cards but feeding through gradually.”

“Mortgage rates have been much more stable recently, with most lenders making small improvements when they can. Although today’s figures are positive, I don’t expect to see a significant change to that pattern. Similarly, we’ll hope that markets will give a calm reception to any inflation increases in the months to come.”

Meanwhile, Spicerhaart and Just Mortgages chief executive officer John Phillips adds: “Some good news on inflation will be welcomed by the Chancellor as she prepares to deliver her Spring Statement today.”

“However, it looks like it could be just a blip as the government’s policy on national insurance and other tax hikes will soon filter into the equation. That’s on top of changes to energy prices and council tax also due soon, as well as any further geopolitical escalation we could see.”

“Economists suggest September as the peak for inflation and remain confident that inflationary pressures will eventually subside and return to the 2% target. As we’ve seen though, predicting inflation can be a fool’s errand – particularly in this economic climate. All eyes will be on the MPC to see how it responds to this changing picture.”

“While its gradual and careful approach is important and works to a point, we also need decisive action to safeguard the economy and support the key drivers of economic growth – such as the property market.”

“Attention now turns to the Chancellor’s announcement at midday, with hopes that any potential spending cuts or further tax rises don’t end up fuelling inflationary pressures.”

“We’ve already seen some positive news around additional funding for affordable housing – let’s hope she is able to squeeze in some support to enable more people to buy.”