Rate of inflation eases to 3.4% in February, official figures show
The rate of inflation slowed sharply to an annual rate of 3.4% in February, according to official figures charting a big contribution from food costs.
Data from the Office for National Statistics (ONS) showed an easing in the headline measure from the 4% rate recorded the previous month to a level last seen almost two-and-a-half years ago.
It was led, the report said, by food prices being almost flat this year compared with a large rise last year, while restaurant and café price rises also slowed.
Money latest: Reaction as UK inflation eases by more than expected
“These falls were only partially offset by price rises at the [fuel] pump and a further increase in rental costs,” ONS chief economist Grant Fitzner said.
The data marks further progress in the battle against energy-led price growth that followed Russia’s war in Ukraine and inflation is forecast to fall back below the Bank of England‘s target rate of 2% in the next few months.
However, the Bank’s interest rate-setting committee is widely expected to hold off on removing the medicine it has dished out to tackle inflation, possibly until the summer.
Its latest rate decision is due on Thursday.
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Will the UK come out of recession?
Interest rate cuts would provide relief to millions of borrowers who have faced hefty increases to their costs as a consequence of higher interest rates.
But committee members are wary of starting the process as it’s feared inflation may tick back up in the second half of the year.
While there was some comfort in the latest data from core inflation figures, which strip out volatile elements such as food and energy costs, they are waiting for visibility on many price pressures including the pace of wage growth, disruption to shipping in the Red Sea and rising global oil costs.
Regular pay rises, according to separate ONS data last week, were still running above 6% – a level that could help drive demand in the flatlining economy and force up the pace of price increases.
Brent crude oil costs hit levels not seen since October last year earlier this week at $87 per barrel.
Interest rate cuts would help put more money back in people’s pockets over time, boosting the economy which officially entered recession in the second half of last year.
The economy is predicted to be the main battleground in the looming election so the timing of such action, by the politically neutral Bank, could be crucial.
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‘I’m frustrated, I want an election’
London Stock Exchange Group (LSEG) data suggests the market expects the first cut to come in June but there is a growing school of thought that inflation may remain stickier than expected by that time, leaving August more in the frame.
Chancellor Jeremy Hunt said of the inflation data: “The plan is working. Inflation has not just fallen decisively but is forecast to hit the 2% target within months.
“This sets the scene for better economic conditions which could allow further progress on our ambition to boost growth and make work pay by bringing down national insurance as we work towards abolishing the double tax on work – but only if we can do so without increasing borrowing or cutting funding for public services.”
Rachel Reeves, Labour’s shadow chancellor, responded: “After fourteen years of chaos and uncertainty under the Conservatives working people are worse off. Prices are still high, the tax burden is the highest it has been in seventy years and mortgage payments are going up.
“Now Rishi Sunak is putting forward a reckless £46bn unfunded tax plan to abolish National Insurance that would risk crashing the economy and re-running the disastrous Liz Truss experiment.
“Britain cannot afford another five years of this failed Conservative government. It’s time for change and it’s time for Rishi Sunak to set the date for the election.”
The new version of the ChatGPT AI chatbot has been unveiled and offers near-instant results across text, vision and audio, according to its maker.
OpenAI said it was much better at understanding visuals and sounds than previous versions.
It offers the prospect of real-time ‘conversations’ with the chatbot, including the ability to interrupt its answers.
The firm says it “accepts as input any combination of text, audio, and image and generates any combination of text, audio, and image outputs”.
GPT-4o is to be rolled out over the next few weeks amid a battle by tech firms to develop ever-more advanced artificial intelligence tools.
Monday’s announcement showed tasks such as real-time language translation; using its vision capability to solve a maths question on a piece of paper, and to guide a blind person around London.
GPT-4o can respond to audio in as little as 232 milliseconds, with an average of 320 milliseconds, which the company says is similar to human response time.
To try to ease concerns over bias, fairness and misinformation, the Microsoft-backed company says the new version has undergone extensive testing by 70 external experts.
It comes after Google earlier this year had a major PR blunder over images generated by its Gemini AI system.
GPT-4o model will be free, but premium ‘Plus’ users get a greater capacity limit for messages.
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Previous versions of the chatbot have caused unease in schools and universities due to some students using it to cheat by producing convincing essays.
When it launched two years ago, ChatGPT was said to be the fastest-ever app to reach 100 million active monthly users.
The announcement also stole a march on Google, which is expected to tomorrow show off its own new AI features at its annual developers’ conference.
Nadhim Zahawi, the former chancellor, is to be named as chairman of one of Britain’s biggest online retailers, days after confirming that he would step down from parliament at the next general election.
Sky News has learnt that Mr Zahawi is to be appointed non-executive chair of Very Group, the largest remaining part of the Barclay family’s business empire.
Sources said the appointment, which will see him replacing interim chair Aidan Barclay, would be announced on Monday.
His arrival at Very Group will come during a period of turbulence for the Barclay family, who own The Daily Telegraph but are unable to exert influence over it under a government order while its future ownership remains uncertain, subject to a forthcoming auction.
Mr Zahawi’s appointment at Very Group, first revealed by Sky News in March, is likely to prompt a search for fresh equity investment in the near term, as well as a broader review of its capital structure.
The company, which owns the Very and Littlewoods brands, is weighed down by debt, but has nearly 4.5 million customers and significant expansion targets.
Based in Liverpool, it sells electrical goods, homewares and fashion, backed by a large consumer finance arm.
It is said to have performed resiliently despite uncertainty over its ownership.
The company recently said it had secured £125m of new debt funding from Carlyle Global Credit and IMI, which the company has said is designed to support future growth.
Mr Zahawi, the MP for Stratford-on-Avon since 2010, had a brief stint as chancellor of the exchequer, while he also held ministerial posts at the Department of Health and Social Care – where he oversaw the vaccine rollout during the COVID pandemic – the Department for Business and as chancellor of the Duchy of Lancaster.
He was made Conservative Party chairman by Rishi Sunak but was dismissed for failing to disclose he was being investigated by HMRC and the National Crime Agency over a multi-million pound tax dispute related to the sale of shares in his polling firm YouGov while he was chancellor.
He said he had made a “careless and not deliberate” error after initially saying he had no knowledge of the investigation and had “paid all taxes”.
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February 2023 – Zahawi: Starmer grills Sunak
Mr Zahawi’s announcement last week that he would not stand again at the next election meant he joined the likes of Theresa May, the ex-prime minister, and former Conservative Party chairman Sir Brandon Lewis in deciding to leave parliament.
Prior to his political career, he was the founder of YouGov, while he is now a patron of the Adam Smith Institute, the economic thinktank.
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Mr Zahawi has been playing a role as an intermediary between the Barclay family and the Abu Dhabi-based investor IMI Investments since its interest in participating in a bid for The Daily Telegraph emerged last summer.
He had been tipped to chair the newspaper group if RedBird IMI, a vehicle fronted by former CNN president Jeff Zucker, had been successful in buying it.
However, a fierce backlash from Conservative parliamentarians prompted Downing Street to intervene and amend legislation to prohibit ownership of British newspaper titles by investors connected to a foreign state.
RedBird IMI is now finalising preparations to conduct a further auction of the Telegraph newspapers and The Spectator magazine.
The Barclays, who used to own London’s Ritz hotel, have already lost control of several of their corporate assets.
In February, Yodel Group, their parcel delivery business, narrowly averted insolvency when it was sold to a consortium backed by executives at Shift, a rival.
The parent company of ArrowXL, another delivery firm they own, had been forced into administration by HSBC, its principal lender.
Half of the £1.2bn loan that the Barclays took from RedBird IMI and IMI was secured against their media assets, with the bulk of the remainder said to have been secured against other assets including Very Group.
At various points in the last decade, the Telegraph proprietors have explored a sale of the online shopping business, having valued it at over £3bn.
Very Group and Mr Zahawi both declined to comment.
The major backer of Pinewood Studios is among the suitors vying to buy Village Hotels, one of Britain’s biggest mid-market hotel chains.
Sky News understands Aermont, which specialises in real estate-backed investments, submitted an offer last week for Village Hotels, which is owned by KSL Capital Partners.
City sources said KSL was seeking offers worth in the region of £850m or more.
A number of other parties are also understood to have tabled bids ahead of a deadline last week.
Blackstone, the giant private equity firm, is considering making an offer but has yet to do so, according to insiders.
The auction is being handled by bankers at Morgan Stanley.
It comes months after attempts to sell Center Parcs UK were called off, while a mooted sale of Travelodge has so far failed to result in a deal.
Village Hotels comprises a portfolio of more than 30 properties from Aberdeen to Bournemouth, with rooms available at budget prices.
Founded in 1995 as Village Urban Resorts, the hotels feature pub-style restaurants and gyms.
KSL was reported to have paid £485m for the business when it bought it in 2014 from De Vere Group.
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The Denver, Colorado-based buyout firm has also owned other UK hotel chains including Hotel du Vin and Malmaison.
Aermont and Blackstone declined to comment.
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