市場分析

UK Inflation Drops More Than Expected to 2.6% in March

Mellissa · 16 Apr49.5K 閱讀

Image Credit: Reuters

British inflation eased to its lowest level in three months in March, according to official data, showing a cooling trend in other key measures closely monitored by the Bank of England.

Inflation dropped to 2.6% year-on-year in March, down from 2.8% in February and below the expected 2.7%, based on a Reuters poll of economists, the Office for National Statistics reported.

Lower fuel prices and stable food costs contributed to the decline, although clothing prices saw a significant rise after unexpectedly falling in February, the ONS added.

The Bank of England's latest forecasts predict inflation will peak at 3.7% in the third quarter of this year, nearly double its 2% target, driven largely by energy costs and regulated household utility and transport tariffs.

Since those projections were made, President Donald Trump's trade tariffs have raised concerns about a potential slowdown in the global economy.

Martin Sartorius, principal economist at the Confederation of British Industry, noted that higher U.S. tariffs could have both upward and downward impacts on UK inflation. However, he believes the Bank of England is likely to cut interest rates next month.

"Looking ahead, we expect the BoE to maintain its 'gradual and careful' approach to reducing borrowing costs amid economic uncertainty," Sartorius said.

BoE Deputy Governors Clare Lombardelli and Sarah Breeden, along with Monetary Policy Committee member Megan Greene, have all stated that it's too early to determine the full inflation impact of Trump's tariff decisions.

Following the inflation data release, the pound dropped slightly against the US dollar.

Inflation in services slowed to 4.7% in March, down from 5.0% in February, though it was still slightly above the 4.8% expected by the Reuters poll.

Core inflation, which excludes energy, food, and tobacco, also eased slightly.

Despite a slowdown from the high inflation levels of 2022, inflation remains a concern for UK consumers. Rising inflation expectations among the public and businesses are adding to uncertainty for Bank of England policymakers, who are closely monitoring other indicators of price pressures as they decide when to reduce borrowing costs.

Ahead of the inflation data release, financial markets had largely priced in a rate cut, with the Bank of England's benchmark rate expected to drop to 4.25% from 4.5% at its next monetary policy meeting on May 8.