Inflation fell more than expected in March, with the annual rate dropping to 2.6 per cent, according to figures released by the Office for National Statistics.
The latest data shows inflation continuing its downward trend.
Inflation fell more than expected in March, with the annual rate dropping to 2.6 per cent, according to figures released by the Office for National Statistics
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Economists had forecast a rate of 2.7 per cent for the month, making the actual figure a positive surprise for the economy.
It follows a February reading of 2.8 per cent and a January figure of three per cent, driven by easing clothing prices and lower energy costs.
Price growth remained subdued ahead of a predicted rise in April, when millions of households will begin paying more for council tax and utility bills.
Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group, said: “While the weather’s been picking up, inflation has been cooling down, falling to 2.6 per cent in March. Unfortunately, this might be the last of the good news, as the impact of a tumultuous April kicks in next month – energy price rises and other bill increases combined with the impact of tariff turmoil all look set to make their mark.
“While these economic conditions are still evolving, markets are still anticipating a cut to the base rate at next month’s MPC meeting. While this will be welcomed by borrowers and mortgage holders, it will mean lower interest rates for savers. With the possibility of inflation rising once April price rises are factored in, shopping around for the best rates remains crucial in order to avoid losing returns on savings.
“For those more comfortable with taking on risk, investing can provide the potential for higher long-term returns and, if your finances allow, you might be in a position to take advantage of the current lower market prices, though investing comes with no guarantees. Irrespective of market conditions, pensions remain one of the most tax-efficient ways to save, combining benefits of possible investment growth, employer contributions and tax efficiency making them a compelling option for long-term savers.”
Markets are still anticipating a cut to the base rate at next month’s MPC meeting
PA
Before US President Donald Trump reignited trade tensions with a fresh round of tariffs, analysts had expected inflation to climb from April, peaking at around 4 per cent this summer before easing in 2026.
But the global economic outlook has shifted. With US tariffs targeting Chinese goods, some analysts now believe China may reroute exports to Europe at lower prices, potentially putting downward pressure on inflation in the UK and the EU.
This uncertainty is piling pressure on the Bank of England to cut interest rates to support the economy.
Former Bank of England deputy governor Sir Charlie Bean said last week that the central bank should “set aside concerns about inflation” and consider slashing interest rates by at least half a percentage point.
His comments were echoed by former Prime Minister Gordon Brown, who called for coordinated rate cuts from central banks around the world in response to rising global instability.
The Bank’s Monetary Policy Committee is due to meet in May, with markets now pricing in a higher likelihood of a rate cut.