The UK’s annual inflation rate fell in March for a second consecutive month, dropping to 3.2% – the lowest level since September 2021 – easing pressure on households amid the cost of living crisis.
Figures from the Office for National Statistics (ONS) show inflation as measured by the consumer prices index continued to fall from 3.4% in February. City economists had forecast a reading of 3.1%.
A reduction in the rate of inflation does not mean that prices are falling, just that they are rising more slowly. The last time inflation was lower was in September 2021, when it was 3.1%.
It comes as the Bank of England considers the timing of a first cut in interest rates after ramping up borrowing costs to the highest level since the 2008 financial crisis in response to soaring inflation. The measure for the annual increase in living costs reached a 41-year high of 11.1% in October 2022 after the Covid pandemic and Russia’s invasion of Ukraine.
Financial markets have slashed expectations for an imminent cut after signs of persistent inflationary pressures in the US, with investors pushing back the timing of a first Bank of England rate cut from June to August or September.
However, economists expect a further decline in inflation in April, with the potential to fall below the Bank’s 2% target after a sharp drop in household gas and electricity bills to the lowest level for two years.
More details soon …