UK inflation falls to 3.2% in March
Key Points at a Glance:
- The Consumer Prices Index (CPI) rose by 3.2% in the 12 months to March 2024, down from 3.4% in February.
- The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.8% in the 12 months to March 2024, unchanged from February.
CPI inflation dropping to 3.2% marks its lowest level since September 2021. This decrease, highlighted by data from the Office for National Statistics (ONS), reflects a continuing trend from February’s 3.4% figure.
Economists had anticipated a slightly lower reading of 3.1%.
It’s important to note that a reduction in the inflation rate doesn’t signify a decrease in prices but rather a slower rate of increase.
The last time inflation dipped to a comparable level was in September 2021, registering at 3.1%. In October 2022, the measure for the annual rise in living expenses hit a 41-year peak at 11.1%, spurred by the impacts of the Covid pandemic and Russia’s invasion of Ukraine.
Despite expectations for a swift Bank of England base rate cut diminishing due to persistent inflationary pressures observed in the US, financial markets have adjusted their predictions. Investors have pushed back the projected timing of the first Bank of England rate cut from June to August or September.
Nevertheless, economists foresee a further downturn in inflation come April, potentially dropping below the Bank’s targeted 2%.
This anticipation stems from a significant decrease in household gas and electricity bills, plummeting to their lowest levels in two years.
In summary, the March 2024 inflation update provides valuable insights into economic stability, highlighting key drivers, implications for interest rates, and government responses. Understanding these trends is essential for informed decision-making in financial matters.
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Data Source: Office for National Statistics (ONS)
Read more: Consumer price inflation, UK: March 2024
