The Office for National Statistics (ONS) has confirmed that the Consumer Prices Index (CPI) rose by 3.4 per cent in the 12 months to February 2024, down from 4 per cent in January, marking a new two-year low.

According to the ONS, the largest downward contributions to the monthly change in both CPIH and CPI annual rates came from food, and restaurants and cafes, while the largest upward contributions came from housing and household services, and motor fuels.

Industry experts have welcomed the fall in inflation, with Standard Life managing director for retail direct, Dean Butler, suggesting that the news will come as a “huge relief to households, hopefully bringing some much-needed springtime positivity after what’s been another hard winter”.

“With the energy price cap set to fall from the 1 April too, we’re hopefully on a trajectory to a less challenging set of economic conditions,” he said.

“As we move closer to the Bank of England’s 2 per cent inflation target, there will undoubtedly be a resurgence of speculation around when they’ll move to cut the base interest rate, lowering the cost of borrowing but reducing returns on savings.”

This is also expected to be good news for pensions, as PensionBee director of public affairs, Becky O’Connor, suggested that “for pension savers and other long-term investors, real returns are back on the table”.

“The prospect of beating inflation with either stock market growth or interest rates on savings accounts is now broadly achievable, having been difficult over recent months,” she continued.

“Pensions are long-term investments designed to beat inflation over many years, even if there are some volatile times along the way. The recent period of exceptionally high prices, coupled with unreliable investment growth, has been a worrying time for those trying to build future financial security as well as those in retirement already.

“An improved inflationary outlook, together with expectations of decent returns, will be a relief.”

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