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UK Inflation falls at a snail's pace

Published 17/04/2024, 07:26
© Reuters.  UK Inflation falls at a snail's pace

Proactive Investors - The March inflation print came in hotter than expected at 3.2% against market forecasts of 3.1%, though this still makes for the lowest year-on-year rate since August 2021.

Annual core inflation (which is a better indicator of consumer income pressures) slowed to 4.2% in March, the lowest since December 2021 and down from 4.5% in February.

Retail prices, which also came out this morning, decreased to 4.3% year on year in March from 4.5% in February, marking the lowest rate of retail price inflation since July 2021.

It paints a picture of dogged determination for the economy to cool, though at a slower rate than policymakers might hope.

Office of National Statistics chief economist Grant Fitzner noted that “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,” he added.

George Lagarias, chief economist at Mazars said: “UK headline inflation is coming down at a snail's pace. While producer prices fell further, services inflation saw the biggest jump in over six months.

"The UK is hitting the same ‘sticky’ inflation patch as the US, the point where energy and goods have stopped dis-inflating prices, but services persist as the labour market remains tight.

“However, there is one big difference with the US: the British economy is in a technical recession, and demand is much weaker.

“Despite the slightly stronger than expected inflation number, the shallow economic trajectory still allows the Bank of England enough room to begin cutting rates this year."

Read more on Proactive Investors UK

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