According to the report from the Office for National Statistics (ONS), consumer prices rose by 10.1% per annum in March after rising by 10.4% per annum in February. Economists had expected CPI growth by 9.8% per annum. Inflation remains above 10% for the seventh month in a row and is more than 5 times higher than the Bank of England's target level (2%), suggesting that policymakers may continue to tighten monetary policy to curb inflation. The easing in the annual inflation rate in March mainly reflected price changes in the transport division, particularly for motor fuels. There were also downward effects from housing and household services, furniture and household goods, clothing and footwear, and restaurants and hotels. These were partially offset by upward effects coming from food and non-alcoholic beverages, and recreation and culture.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose 6.2% per annum, as in February. This was the strongest growth since December 2022. Consensus estimates suggested an increase by 6.0% per annum.
On a monthly basis, the consumer price index rose by 0.8% after increasing 1.1% in February. It was the second monthly increase in a row. Economists had expected CPI growth by 0.5%.
In March, the Bank of England said it expected a "significant decline" in inflation in the second quarter. In February, the Bank of England forecast March inflation at 9.2%. Given the latest data, financial markets see an approximately 80% probability that the Bank of England will raise interest rates next month.