UK Inflation holds at 3% – what does it mean for your money?

Prices in the UK rose 3% in the year to February, the same rate recorded for the previous month, according to the latest Office for National Statistics (ONS) data.

Inflation measures the increase of goods and services over time.

Although the inflation rate held steady, it doesn’t take into account the impact of the escalating conflict in the Middle East, which caused a surge in oil and gas prices.

The current level of inflation is still above the Bank of England’s target of 2%.

Why are prices rising?

Rising clothing and footwear prices were the largest contributing factor to the current level of inflation.

These costs saw a 0.9% jump in the 12 months to February compared to no increase in the 12 months to January.

Food inflation slowed from 3.6% to 3.3% in February.

However the ongoing crisis in the Middle East could result in an 8% jump in food prices by June 2026, according to analysis from the Institute of Grocery Distribution (IGD).

Can you beat inflation?

Protecting your spending power is key. Although price changes are out of your control, there are ways to minimise the impact on your finances.

Shopping smart is a great first step. Comparing prices at different supermarkets for your food shop, or petrol stations for refuelling can help you find the cheapest places to buy your essentials.

Making sure your savings are in an inflation-beating savings account or Cash ISA. That’s because if you’re not earning an interest rate that’s above the current rate of inflation, your cash loses value because you won’t be able to buy as much with it.