The latest inflation figures for the UK have been released today
Infaltion has dropped for the year to March, with the Consumer Prices Index figures out today revealing that costs are rising at a rate of 3.2 percent, down from 3.4 percent in February.
The Bank of England – which meets to set interest rates on May 9 – has a target to keep inflation at two percent through its monetary policy and will no doubt take note of today’s figures.
On Tuesday, April 17, the chief UK economist at Pantheon Macroeconomics, Rob Wood, said that an 85,000-person rise in unemployment figures could push the central bank’s Monetary Policy Committee to consider lowering the base rate from its 16-year high of 5.25 percent.
The latest figures show prices for food and non-alcoholic drinks rose four percent, down from five percent in February.
Costs for bread and cereals went up by 0.2 percent between February and March, compared to 2.2 percent a year ago, while meat prices dropped 0.5 percent between the two months, compared to 1.4 percent 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.”
Prices fell for furniture and household goods, dropping 0.9 percent for the year to March, compared to a 0.1 percent increase to February.
Daniel Austin, CEO and co-founder at ASK Partners, said: “Decreasing inflation suggests that the Bank of England is likely to maintain interest rates for an extended period, particularly considering the signs of economic recovery we’ve witnessed.
“This all points to a positive domestic story of an economy exiting a mild recession but does mean that pressure will remain on those servicing debt and with ongoing global market uncertainty surrounding the Middle East crisis, the coming months are set to be shaky.”
Chancellor Jeremy Hunt said of the latest figures: “The plan is working: inflation is falling faster than expected, down from over 11 percent to 3.2 percent, the lowest level in nearly two-and-a-half years, helping people’s money go further.
“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.”
Inflation has dropped in the latest figures
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.”
Becky O’Connor, director of Public Affairs at PensionBee, spoke about what the latest inflation statistics mean for pensioners.
Inflation has dropped in the latest figures
She said: “Pensioners have just received a boost to state pension income of 8.5 percent as a result of April’s triple lock rise, so this should mean enough headroom for older people, especially those who are dependent on their state pension for retirement income, keep on top of their bills.”
She also said: “For savers and investors, any nudging down in inflation while interest rates and investment growth remain higher on the whole, means greater rewards over time.
“In the context of average wage rises, if this dynamic continues, this could mean people feel more able to build savings back up and boost overall household resilience once again.”
The news comes after many household bills increased this month, including water bills, council tax and mobile and broadband.
Council tax went up by the maximum five percent in many parts of England while some struggling authorities upped rates by 10 percent.
Energy bills went down from this month as the energy price cap came in, with bills for the average dual fuel household dropping from £1,928 a year to £1,690 a year.
Richard Neudegg, director of regulation at Uswitch.com, encouraged those on a standard variable tariff to look around for a better deal.
He explained: “Some fixed deals available offer savings against the current price cap, but we expect there to be increased competition on the market now prices are set to fall in April.
“If you’re thinking of switching to a fixed deal, pay attention to any exit fees, which could cost between £25 and £150 per fuel. If you change your mind after the cooling-off period or spot a better deal you wish to switch to, you may need to pay to leave.
“If you’re not sure whether to opt for a fixed deal, perhaps consider a variable tariff, which often has no exit fees so you can switch away if a better option becomes available.”
For the latest personal finance news, follow us on Twitter at @ExpressMoney_.