'No interest rate rise until autumn 2015' after inflation hits four-year low

Inflation has dipped to a new, four-year low, easing the pressure on the Bank of England to raise interest rates and increasing the likelihood of real wages turning positive in the coming months.

The annual rate of consumer price inflation declined to 1.7 per cent in February, according to the Office for National Statistics (ONS). That is down from 1.9 per cent the previous month and the lowest rate of price rises since October 2009

"The continued benign inflationary conditions are supportive of a dovish MPC [Monetary Policy Committee] meaning it is still likely that the first hike will not occur before the third quarter of 2015 despite the strengthening labour market," said Simon Wells of HSBC.

Real wages have been in decline since the financial crisis, with pay rises lagging behind prices over the past five years.

In the three months to January, pay across the economy rose 1.4 per cent while inflation over that period eased to 1.9 per cent.

"There is now a distinct possibility that real wage growth will hit positive territory in April, helping to support household spending," said Martin Beck, economic adviser to the EY Item Club.

The MPC has stated that it will keep rates at their record low of 0.5 per cent so long as there remains a margin of slack in the economy. Financial markets expect the first rate rise to come in the second quarter of next year, around the same time as the general election.

The Bank's official target is to keep inflation at 2 per cent over its forecast horizon. The Bank's most-recent forecasts from February showed inflation dipping to an average of 1.8 per cent this quarter, before rising back up to 2 per cent in the middle of the year.

The ONS said that the largest contribution to the fall in consumer price inflation had come from transport, which increased 0.3 per cent between January and February following a 1.2 per cent rise in the two months a year earlier. There was also downward pressure on the annual inflation rate from clothing and footwear.

Factory-gate inflation also slowed in February, rising by 0.5 per cent in the year to February, down from 0.9 per cent in the year to January and suggesting subdued price pressures down the line.

However, core consumer inflation in February, which strips out volatile items such as food and energy, crept up to 1.7 per cent, from 1.6 per cent previously.

Consumer price inflation soared above the Bank's 2 per cent target in the wake of the 2008/2009 recession, peaking at over 5 per cent. It finally fell back to the 2 per cent target in December.

Property boom: Going through the roof

Average house prices are growing at their fastest rate since the autumn of 2010, with London's up more than 13 per cent on a year earlier.

Nationwide said prices rose 6.8 per cent in the year to February, up from 5.5 per cent in December. After the capital, the biggest monthly increases in property values were seen in the South-east and Wales where prices were up 7.1 per cent and 6.9 per cent respectively.

The weakest growth was in the North-east (0.6 per cent) and Scotland (1.4 per cent).

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
Arts and Entertainment
Standing the test of time: Michael J Fox and Christopher Lloyd in 'Back to the Future'
filmA cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Arts and Entertainment
Flora Spencer-Longhurst as Lavinia, William Houston as Titus Andronicus and Dyfan Dwyfor as Lucius
theatreThe Shakespeare play that proved too much for more than 100 people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
PROMOTED VIDEO
Arts and Entertainment
Stir crazy: Noel Fielding in 'Luxury Comedy 2: Tales from Painted Hawaii'
comedyAs ‘Luxury Comedy’ returns, Noel Fielding on why mainstream success scares him and what the future holds for 'The Boosh'
Life and Style
Flow chart: Karl Landsteiner discovered blood types in 1900, yet scientists have still not come up with an explanation for their existence
lifeAll of us have one. Yet even now, it’s a matter of debate what they’re for
Arts and Entertainment
'Weird Al' Yankovic, or Alfred Matthew, at the 2014 Los Angeles Film Festival Screening of
musicHis latest video is an ode to good grammar. But what do our experts think he’s missed out?
Sport
New Real Madrid signing James Rodríguez with club president Florentino Perez
sportColombian World Cup star completes £63m move to Spain
Travel
Hotel Tour d’Auvergne in Paris launches pay-what-you-want
travelIt seems fraught with financial risk, but the policy has its benefits
Arts and Entertainment
booksThe best children's books for this summer
Life and Style
News to me: family events were recorded in the personal columns
techFamily events used to be marked in the personal columns. But now Facebook has usurped that
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

Noel Fielding's 'Luxury Comedy'

A land of the outright bizarre
What are the worst 'Word Crimes'?

What are the worst 'Word Crimes'?

‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
Can Secret Cinema sell 80,000 'Back to the Future' tickets?

The worst kept secret in cinema

A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
Facebook: The new hatched, matched and dispatched

The new hatched, matched and dispatched

Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
Why do we have blood types?

Are you my type?

All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
Honesty box hotels: You decide how much you pay

Honesty box hotels

Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

Michael Jamieson: Why weight of pressure rests easy on his shoulders

The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn