According to the report from the Office for National Statistics (ONS), in March consumer prices rose by 3.2% per year after an increase by 3.4% in February. The latest reading was the lowest since September 2021. Economists had expected inflation to slow to 3.1%.
The ONS said that the largest downward contributions to the CPI annual rates came from food, with prices rising by less than a year ago, while the largest, partially offsetting, upward contribution came from motor fuels, with prices rising this year but falling a year ago.
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.”
Economists expect a further decline in inflation in April, with 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.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose by 4.2% per annum (the lowest rate since December 2021) after an increase by 4.5% in February. Consensus estimates suggested an increase by 4.1% per annum. On a monthly basis, core consumer prices rose by 0.6%, compared with the 0.6% increase in February and the market estimate of a 0.3% increase.
The data also showed that on a monthly basis, the consumer price index increased by 0.6%, as in February. Economists expected a 0.5% increase.