Inflation slows to 2.2%

The underlying rate of inflation fell 0.4% last month to 2.2% - below the government's target of 2.5% - official figures showed today.

The office for national statistics (ONS) said RPIX - inflation minus the cost of mortgage interest payments - slowed to 2.2% in the year to February from 2.6% in January.

The headline rate, which includes home loan payments, fell 0.3% to 1.0%, the ONS added.

Economists had forecast an underlying rate of 2.4% for February. Figures for January showed a surprise jump in RPIX to 2.6% - only the second time in 34 months that the underlying rate of inflation had gone above the government's target.

Today's figures will come as a relief for the Bank of England, as there were fears in January that interest rates would have to rise to dampen price pressures during a fragile global recovery. Current rates of 4% are at their lowest for almost 40 years.

The inflation figures also came in below City expectations. David Page, an economist at Investec bank, said: "2.2% was surprisingly benign."

The figures gave the Bank of England somewhat more room on when it chose to increase interest rates, he added. Mr Page said he was pencilling in a quarter point rise in interest rates in June, or possibly July.

The largest downward effect on prices came from women's clothing, largely because January sales discounts were lower than in 2001, making post-sales price rises less than last year.

The ONS also said petrol and oil prices rose 0.2% in February from January, reflecting tighter oil markets.

The largest upward pressure came from telephone charges. There were smaller upward effects from alcoholic drinks, fares and other travel costs.

Seasonal food prices, which in January had jumped 4.2%, fell 2.4% in February, mainly due to price changes for fresh vegetables.