UK inflation falls less than expected to 3.2% in March

UK inflation slowed to 3.2 per cent in March, down from 3.4 per cent as price rises continued to slow, easing pressure on households in the cost of living crisis.

The figures released by the ONS on Wednesday morning showed that inflation was 3.2 per cent in March, which is slightly higher than the 3.1 per cent predicted by economists.

This is the lowest level inflation has been at since September 2021. Despite inflation falling it does not mean that prices are falling, only that they are rising at a slower pace.

ONS chief economist Grant Fitzner said: “Inflation eased slightly in March to its lowest annual rate for two-and-a-half years.

“Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago. Similarly to last month, we saw a partial offset from rising fuel prices.”

The latest figures are moving gradually closer to the Bank of England’s 2 per cent inflation target and come ahead of the next interest rate decision on Thursday.

Financial markets overwhelmingly think that policymakers will keep interest rates on hold at 5.25 per cent, but the fall in inflation today increases the chances of them being cut in the summer, in what would be a welcome boost to homeowners with borrowings.

“This welcome news comes on top of our cuts to national insurance, which save the average worker £900-a-year, so people should start to feel the difference as well as see it in their pay cheques.”

Chancellor Jeremy Hunt, said: “The plan is working: inflation is falling faster than expected, down from over 11% to 3.2%, the lowest level in nearly two-and-a-half years, helping people’s money go further.”

Rachel Reeves, Labour’s shadow chancellor, said: “Conservative ministers will be hitting the airwaves today to tell the British people that they have never had it so good. However, after 14 years of economic failure under the Conservatives working people are worse off.

“Prices are still high in the shops, monthly mortgage bills are going up and inflation is still higher than the Bank of England’s target. At the same time Rishi Sunak risks crashing the economy again with his Liz Truss-backed £46 billion unfunded tax plan to abolish national insurance.

“The truth is Rishi Sunak is too weak to fix the economy his party broke and too out of touch to deliver for working people. It’s time for change. Only Labour has a long-term plan to grow our economy, cut people’s bills and make working people better off.”

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