Inflation has dipped, boosting mortgage borrowers’ hopes of more interest rate cuts.

Official figures showed that CPI eased to 2.8% in February, down from 3% the previous month.

It is better than the 2.9% that analysis had expected, but still above the Bank of England’s 2% target.

However, industry experts commented the figures could be a false dawn.

The figures have been released ahead of the Chancellor’s Spring Statement later today.

Inflation only moderately above target

Lindsay James, of wealth manager Quilter, said: ”With Rachel Reeves up at the despatch box later today to reassure not only investors, but the nation that the economy is doing just fine, today’s inflation figures are a remind of what lurks ahead.

“While inflation is only moderately above target, the news looks fairly bleak as we move through the year, leaving the Government with plenty of work to do.”

Planned hikes in energy costs, along with national insurance cost for companies, is expected to push inflation higher later on in the year.

Mortgage borrowers

In the meantime, mortgage borrowers will welcome the dip in inflation.

Mark Harris, of mortgage broker SPF Private Clients, explained: “With inflation dipping to 2.8%, this is encouraging news as far as future interest rate movements are concerned, and if this downwards trend continues, it will make it easier for the Bank of England to cut rates again sooner rather than later.

"Another rate reduction would help boost the housing market and wider economy, and would be particularly timely with the stamp duty concession coming to an end this month.

“On the mortgage front, a number of lenders have cut their rates on the back of lower swap rates, which is encouraging news for borrowers."

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