Prices in the United Kingdom rose during March at the slowest rate for two and a half years.
The Office for National Statistics, or ONS, said on Wednesday the 3.2 percent rise in the consumer price index, which was down from 3.4 percent in February, was largely due to falling prices for items including meat, furniture, cleaning products, and chocolate biscuits. The ONS said the price falls were offset by price rises for other items, including bread and cereals.
Overall, inflation edged back toward the government’s target of 2 percent, and was well below the 11.1 percent recorded at the end of 2022.
But, the fall was not quite as large as the 3.1 percent economists had predicted.
The news will, however, have been welcomed by Prime Minister Rishi Sunak and his ruling Conservative Party, with the party well behind the opposition Labour Party in opinion polls during an election year.
The UK’s finance minister, Chancellor of the Exchequer Jeremy Hunt, said the figures were “welcome news” and that “people should start to feel the difference”.
Sunak said “after a tough couple of years, our economic plan is working”.
But Rachel Reeves, the Labour Party’s shadow chancellor, told the BBC: “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.”
Economists will now be watching the UK’s central bank, the Bank of England, to see whether it will cut interest rates, which it has been using to cool inflation.
The bank will next consider a cut in the rate, which is at a 16-year high, during a meeting of its Monetary Policy Committee on May 9, but most experts think the rate will remain unchanged for several months, after the bank’s governor, Andrew Bailey, said this week the fight against inflation is still far from over.
Simon Pittaway, senior economist at the Resolution Foundation think tank, told AP another “significant drop” in inflation is expected next month, which would mean “inflation should soon return to target, and the pressure to cut interest rates will grow”.
But Matthew Ryan, head of market strategy at financial services company Ebury, told the Reuters news agency: “While both the main and core measures of inflation eased to their lowest levels since late 2021, the continued stickiness in services inflation in particular may elicit a cautious approach among Monetary Policy Committee members.”
The Bloomberg news agency said markets think the Bank of England will likely wait until September before cutting its interest rate, with the European Central Bank likely cutting its rate in June, and the United States Federal Reserve expected to cut its rate during the fourth quarter.