Inflation stays at low rate as cheaper used cars offset by rising food prices
Consumers across Northern Ireland and the UK are set to reap the benefits of a continued low rate of inflation.
Inflation remained at 0.3% last month as the falling cost of second-hand cars was offset by rising food prices, according to official figures.
The Office for National Statistics (ONS) said the cost of second-hand cars fell 5.6% year on year in February, while motorbikes and bicycles also dropped 3.6% over the same period.
Food prices continued to fall last month, with the rise of the German discount retailers such as Lidl fuelling a price war.
Angela McGowan, Danske Bank's chief economist, said inflation remains "stubbornly low" at 0.3% which is "always good news for consumers". "For the Bank of England's interest rate policy this subdued level of inflation and relatively low wage growth translates into a 'stay on hold' position for an extended period," she said.
However, she said the upcoming EU referendum in June could put serious pressure on the UK economy.
"At Danske Bank we still think the Bank of England could introduce a very small hike in rates in the first half of 2017, but with great uncertainty surrounding the EU referendum, things could change rapidly after that. The upcoming EU referendum represents a significant event risk for sterling and a medium to long-term risk factor for the UK economy." Food prices were down by 2.4% compared with February 2015, but the fall was smaller than the 2.8% annual drop seen in January 2016, driven in part by the rising price of potato crisps.
The cost of food has been dropping for more than a year, as the rise of Aldi and Lidl forces the big supermarkets to slash prices.
Despite February's 0.3% rise in the Consumer Prices Index (CPI), inflation still remains historically low, with the Bank of England predicting it to stay far below the Government's target for some time.
Sharply lower oil prices have also kept a lid on inflation, leaving the central bank in no hurry to raise rates above 0.5%, where they have remained for nearly seven years.
ONS statistician Phil Gooding said: "CPI is unchanged and remains around historically low levels.
"Although most prices remained stable, we have seen falling prices for second-hand cars and bicycles, offset by rising food prices."
February's unchanged level of inflation comes after three months of rising CPI. A large upward impact on February's rate of inflation came from food and non-alcoholic beverages, which saw overall prices rise by 0.1% during the month, compared with a fall of 0.2% a year ago.
Meanwhile, transport had a downward effect, with prices for January and February this year remaining unchanged, compared with a rise of 0.4% between the same two months a year ago.
Clothing prices were up 0.4% compared with a year earlier.
Figures from the ONS show the Retail Prices Index measure of inflation remained at 1.3% last month.
The inflation announcement comes after the central bank voted to keep rates on hold again this month and warned that the UK's vote on its European Union membership could hit UK economic growth.