Nathan Williams
Live reporter

That's it from us today on the release of the latest figures that showed a drop in the UK inflation rate to 3.4%.

For more on today's announcement, click here.

And you can find out more about inflation and how it works here, and calculate how it affects you specifically here.

Thanks for joining us. Today's coverage was brought to you by Paul Gribben, Tom Espiner, Gabriela Pomeroy, Alex Smith, Tarik Habte and me.

We'll be closing this page soon, so here's a quick summary of what we've learned this morning:

• UK inflation fell to 3.4% for the year to February - the lowest level in almost two and a half years
• But that doesn't mean the cost of living is falling, it means that prices are rising less quickly than they were before
• The drop in inflation was helped by a decrease in food price inflation, along with soft drinks, restaurants and hotels, according to the Office for National Statistics
• But this has been partially offset by an uptick in petrol and diesel prices
• A number of economists have predicted that inflation is likely to hit the Bank of England's (BoE) target of 2% this summer
• Chancellor Jeremy Hunt says this shows "the plan is working", and it now "opens the door" for the BoE to consider bringing down interest rates
• But Labour's Rachel Reeves says "prices are still high" and the country "cannot afford another five years" of a Conservative government

Image source, BBC News

Gary Weir is chief owner of Hot Buttered, an event catering firm that serves food for events such as beer festivals.

He's hoping that a drop in inflation means people will have more disposable income. Customers tell him "they have less money to spend".

Weir says "we feel like we need to put our prices up" but that would put off customers. "Even our corporate clients are spending less money," he says.

The living wage is due to go up and while he agrees that his staff should be "comfortable" he says this adds to financial pressures.

"To cope, myself and the other directors are working a lot more in the kitchens to save money rather than time in the office and changing our menus without compromising quality."”

One of the key measures the Bank of England looks at when setting interest rates is wage growth (the other is services inflation).

While UK wage growth has been falling, it is still outpacing inflation.

On the plus side, this means on average people will, over time, be feeling less pressured by general price rises.

But it may also mean the Bank's policymakers remain caution about cutting rates.

Raphael Sheridan
Cost of living producer

Image source, BBC News

Anna Sung owns Fuku foods in Manchester and has been trading for over five years, opening six months before Covid.

"Sky high" costs are one of her biggest concerns - "for instance oil has gone up 100%, wages have gone up, rent has gone up, everything has gone up. Surviving is like a game of Jenga."

Sung does not want those increases to be passed onto her customers - she still wants to offer good value food and be fair to her staff.

Some of her customers come for special occasions like hen or stag parties - Sung says they are willing to spend but “less people are coming”.

Kevin Peachey
Cost of living correspondent

The ONS has published more data - this time on the cost of renting and house prices.

It shows that the average cost of rent in the UK rose by 9% in the year to February. That's another new high when based on comparable records collected since 2015.

The average increases range from 8.8% in England to 10.9% in Scotland.

The ONS figures on house prices come later than many other estimates, but are widely watched by analysts.

They show that UK property prices fell by 0.6% in the 12 months to January, but that's a slower drop than the 2.2% annual fall recorded a month earlier.

Image source, Getty Images

Currency traders are pricing in slightly higher cuts to UK interest rates this year after lower than expected inflation figures.

Money markets are betting there will be 0.7% of rate cuts this year, up from speculation on 0.67% of cuts.

But investors in companies on the London stock market were cautious ahead of a decision on rates by the US Federal Reserve later on Wednesday, with the FTSE 100 edging down.

Central banks around the world tend to follow the lead of the Fed, which is widely expected to hold rates at 5.25% to 5.5%.

In general companies benefit when money is cheaper to borrow, meaning higher returns for investors.

Annual inflation has slowed at its fastest rate since 1978 over the past 12 months, a think tank has said.

This does not mean prices are falling, but that the pace of price rises has slowed down relatively quickly.

The Resolution Foundation, which focuses on how to raise lower incomes, says this was "encouraging news for the Bank of England" because inflation was on course to hit the Bank's 2% target in April.

The measures of inflation the Bank keeps a particularly close eye on when deciding on interest rates are domestically-generated services inflation and wage increases.

Services inflation was slower in February, and wage growth "nominal", which "should give monetary policy makers more confidence that wage pressures on inflation are starting to ease", says James Smith, research director at the Resolution Foundation.

Raphael Sheridan
Cost of living producer

Fritz Ali Khan owns Indian street food business Payal Events in Manchester, serving food to groups on nights out. But he says “people have less disposable income so fewer people are coming out to spend in places like this.”

On top of that, he says: “Cost of living has gone up so staff wages have to go up.

"The rising cost of ingredients and wages are also a challenge."

“Our commercial butcher told us the lamb will go up £1 a kilo… the conversation was 'are we okay with that?' not can we do something? So for the next month we kind of have to absorb that.

“We have to see if we keep lamb on the menu or if we charge extra.”

He says to keep the business going he has “been really creative, thinking outside the box and networking”.

As well as setting up on Deliveroo the business also branched out into Christmas meals: “Last Christmas we did 82 deliveries and Iftar packages for Ramadan."

Kevin Peachey
Cost of living correspondent

More than 1.5 million homeowners will see their relatively cheap mortgage come to an end this year.

They will join many others in facing higher monthly mortgage repayments.

The consumer group Which? says this financial pressure means some are missing the payment of other essential bills.

It says its survey suggests 8.1% of mortgage holders skipped things like utility bills, credit card or loan payments in February and early March.

For renters, who have also seen costs rise, the proportion is higher, at 14%.

The implication is that they are prioritising housing costs over other essential bills.

Raphael Sheridan
Cost of living producer

As today’s inflation figures show, costs in the services sector are still high and that has pushed up prices for things like car insurance, haircuts or meals out.

Shaine Ashley Tench runs A Star Taxis in Crewe. He recently received a quote to insure his fleet which he said he “could not believe”.

“It just knocked me back so much,” he says, “we can’t just put that onto the customers’ price, because we need to be an affordable reliable taxi company in this area. And if we put our prices up then it goes against what we believe in.”

He says he’ll have to find a solution to the problem, although he hasn’t yet got an answer. But he says that any expansion plans might be put on hold because of the additional costs.

Image source, Getty Images

Overall, the inflation rate eased, but this was offset by housing and rental costs rising more quickly.

The annual rate for housing and household services was 2.9% in February 2024, up from 2.5% in January - but quite substantially down from the rate of 11.8% in January and February 2023.

The quicker pace in February this year reflected higher costs for homeowners, including mortgage costs, and rental costs going up.

Price increases for privately rented properties pushed up the rental inflation rate to 6.9% in the year to February, up from 6.5% in January.

The rental sector has been under pressure as buy-to-let landlords pass on higher mortgage costs to renters, or sell up, leaving fewer properties available to satisfy demand.

Kevin Peachey
Cost of living correspondent

Image source, Getty Images

Mortgage brokers hope that today's figures will help ease some of the pressure on people searching for a home loan.

Andrew Montlake, from Coreco brokers, says mortgage pricing for lenders should start to look more favourable, so they could start to bring down the interest rate on new fixed deals.

The rate on a new two-year fixed deal has been stubbornly around the 5.8% mark, and lenders have given people little time to make a decision.

But Mr Montlake says an early cut in the base rate (which influences borrowing costs) by the Bank of England, would "do wonders for consumer confidence".

He wants to hear "positive and decisive rhetoric" from the Bank on an imminent base rate cut. It will make its next decision tomorrow.

Inflation is likely to meet the Bank of England's 2% target in the next two or three months, according to Dr Sushil Wadhwani, economist and former Bank of England policymaker.

He has been telling BBC Radio Four's Today programme it is unlikely the Bank of England would change interest rates tomorrow, but he says the financial markets do expect more cuts by the end of the year.

He says inflation fell this month because food price inflation was much lower. A year ago it stood at 19%, while this month it was 5%. Lower energy price inflation was also a factor.

But Wadhwani says the Bank of England thinks underlying domestically generated inflation - such as services inflation at 6% - is still "uncomfortably high".

Image source, Getty Images

Slowing price rises for gin, whisky and various beers helped bring down the pace of price rises in restaurants and hotels, the Office for National Statistics said.

However, this was slightly offset by rising accommodation prices, in particular from overnight hotel stays.

Inflation almost certain to reach target, but might not feel like itpublished at 08:48 Greenwich Mean Time 20 March

08:48 GMT 20 March

Faisal Islam
Economics editor

The headline rate of inflation is heading in the right direction and is almost certain to be below the Bank of England’s official target of 2% when April’s figures are released in May.

The fall in the energy price cap next month is the biggest change on the horizon.

However, it might not feel like that for many households as "Awful April" will also see a range of above inflation price rises in the new financial year.

Water rates, mobile phone and broadband prices, for example, will all be going up, linked to previous higher rates of inflation.

Car insurance prices for drivers are also surging.

When inflation peaked so high it can have a second life, a long tail. It is one of the reasons why the Bank of England is likely to wait a little longer before starting to cut rates.

The prices of hundreds of everyday items - including food and fuel - are tracked by the Office for National Statistics (ONS).

This "basket of goods" is regularly updated to reflect shopping trends. For example, vinyl records and air fryers were added in 2024, and hand sanitiser was taken out.

The Office for National Statistics looks at price changes for these items over the previous 12 months to help calculate inflation.

• You can read more about what the inflation rate is and how it affects you here.

We're getting more reaction to the latest inflation figures from Chancellor Jeremy Hunt now.

Asked whether he would cut taxes further, Hunt says that as inflation gets closer to its 2% target, this "opens the door" for the Bank of England to consider bringing down interest rates.

There have been concerns that Houthi attacks on ships in the Red Sea would affect the price of goods in the UK due to higher shipping costs.

But Grant Fitzner, chief economist at the Office for National Statistics, tells BBC's Radio 4 Today programme that this is not currently affecting the statistics.

He says this is because potential increases in shipping costs are being offset by the sterling exchange rate which has increased for four months - meaning the UK's ability to pay for imports has improved.

Image source, reu

The Consumer Price Index shows how the rate at which prices are rising has changed over the past few years.

This graph shows it reached a 41-year high of 11.1% in October 2022, and has steadily fallen since then.