UK’s March inflation drops to 3.2%

UK’s consumer price inflation rate has decreased to a two-and-a-half-year low of 3.2 per cent annually in March, a slight drop from February’s 3.4 per cent, the Office for National Statistics (ONS) reported on Wednesday.

This decrease was less than what the Bank of England and economists had anticipated, who had predicted an annual rate of 3.1 per cent.

Following the release of these figures, sterling appreciated against both the dollar and the euro. Core inflation, which excludes energy, food, and tobacco prices, also decreased to 4.2 per cent from February’s 4.5 per cent.

The ONS also reported a slight decrease in service inflation, which the Bank of England closely monitors, to 6.0 per cent from 6.1 per cent. The main factor contributing to the decrease in headline inflation was a slowdown in food prices.

Over the 12 months to March, the prices of food and non-alcoholic beverages increased by 4 per cent, the smallest increase since November 2021.

Grant Fitzner, the chief economist at the ONS, told Reuters that the main reason for the fall was food prices, which rose less than the previous year. He also noted that, similar to last month, rising fuel prices partially offset this decrease, according to Reuters.