UK inflation failed to fall to single digits in March, dipping to 10.1% from its surprise jump to 10.4% in February, according to data from the Office for National Statistics.

The Consumer Prices Index came in higher than expected, with economists having predicted a would fall to 9.8%, although it remains down from the 41-year high of 11.1% set in October 2022.

On a monthly basis, CPI rose by 0.8% in March, compared with a rise of 1.1% in March last year. The monthly change was mainly due to lower fuel prices, housing and household services, partially offset by higher food, recreation and culture prices.

Food and non-alcoholic drink prices were the key driver of inflation, rising by 19.2% in the year to March, up from 18% in February.

Core CPI, which excludes food, energy, alcohol and tobacco, came in at 6.2%, the same reading as last month, showing UK inflation remains sticky.

RI Wealth Management portfolio manager Tom Hopkins said today’s “disappointing” inflation figure could raise expectations for another rate rise from the Bank of England on 11 May.

J.P. Morgan Asset Management global market strategist Hugh Gimber agreed, saying another 25 basis point rate hike appears highly likely in May.

“The Bank must stand ready to take further action unless economic data shows more definitive signs of cooling,” he said. “Policymakers have come a long way in their fight against inflation. Going forward, the biggest mistake would be to claim victory prematurely.

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