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Yael Selfin, Chief Economist at KPMG UK, comments on today’s inflation figures:

Yael Selfin, Chief Economist at KPMG UK, comments

Data published by the ONS today shows that the rate of inflation in February fell to 2.7% from 3.0% in January


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“Data published by the ONS today shows that the rate of inflation in February fell to 2.7% from 3.0% in January. This marks 13 months since the rate of annual inflation crept above the 2% target of the Bank of England. In month-on-month terms, the index of consumer prices grew by 0.4%, which is a relatively subdued increase considering the traditional impact of the January sales.


“The falling prices of IT equipment may encourage companies to increase investment in technology, while the strong rise in furnishing, clothing and footwear prices will be difficult to bear for households already experiencing a squeeze on their real income.


“Fuel prices were broadly flat in February compared to a month earlier – suggesting that the main effect of the recent spike in crude prices has now passed. Likewise, the effects of Sterling‘s depreciation are now diminishing. Our estimates suggest the delayed impact of the Sterling depreciation in mid-2016 contributed 0.3% to the annual rate of inflation in February 2017.


“There are signs that domestic pressures are taking centre stage in driving inflation, as the UK economy runs out of spare capacity. This may be translating into demands for higher pay from employees, to compensate for the squeeze in real income households have been enduring for nearly a year, and may help support consumer spending over the course of 2018.”




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Notes to Editors:

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff.  The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

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