UK inflation falls to lowest CPI in nearly three years – but is it enough?

By:
on Apr 17, 2024
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  • The latest CPI data from the UK's Office for National Statistics is in.
  • It brought good news, with inflation continuing to go down.
  • However, the CPI and CPIH figures were still above expectations.

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This morning, the United Kingdom’s Office for National Statistics (ONS) released March inflation figures for the UK.

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What is the current rate of inflation in the UK?

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CPI fell 0.3% in March 2024 to 4.2%, compared with February’s 4.5%.

This represents the lowest inflation rate for the United Kingdom in more than two years, since September 2021.

Nevertheless, this was marginally above analysts’ forecasts of a 4.1% reading ahead of the data release.

On a monthly basis, CPI rose by 0.6% in March 2024, compared with a rise of 0.8% in March 2023.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.8% in the 12 months to March 2024, unchanged from February.

Find out where inflation is currently around the world

But is it enough?

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Earlier this year the Bank of England (BoE) said that it expected inflation to return to its longtime target of 2% within the second quarter of 2024.

The CPI rate for March is still more than double that, and CPIH is even higher, with the second quarter having already started.

For the BoE to meet its own forecast, inflation in the UK will need to drop, not by 0.3% or 0.2% as it has been doing – it will need to halve within the next couple of months.

When are interest rates reviewed?

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Early next month, on May 9th, the BoE announces its next interest rate decision.

While almost all market analysts seem to believe that an interest rate cut being announced this month is highly unlikely, today’s news is sure to fan the flames of anticipation for a first rate cut for the UK still happening within the first half of this year.

This would put the UK ahead of the United States in the race to cut rates, as the majority of market participants now believe that first rate cut decisions for the US may only come in September, rather than June as was initially hoped for.

Want to know where inflation is around the world right now? Check our interactive inflation infographic.

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