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Inflation falls to 3% in February

The Chancellor the Exchequer Alistair Darling has today received something of a pick me up ahead of Wednesday's budget with news that UK inflation fell from 3.5% in January to 3% in February. It seems that smaller price rises in petrol, household goods and food together with a reduction in gas bills has taken the pressure off the Bank of England, which had begun to become concerned about UK inflation.

However, despite the fact that UK inflation was less than many analysts had expected the pound is still under pressure on the currency markets as it is likely that UK base rates will remain at around 0.5% for some time to come. It will be interesting to see how forecasts for inflation are amended in the short to medium term with the Bank of England and the government looking for the rate to fall to around 2%, the government's target level.

While there are obvious benefits regarding a smaller than expected rate of inflation this will come as no help to UK savers who are unlikely to see their savings rates increase in the short to medium term. Savers in the UK have been forgotten in the financial meltdown with many having to dip into their nest eggs as savings rates fell to near 0%.

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