United Kingdom: Inflation rises in March from February
Latest reading: Consumer prices were up 3.3% in annual terms in March, following a 3.0% rise in the prior month and reflecting higher global energy prices. The reading was in line with market expectations but still well above the Bank of England’s 2.0% target.
Relative to the prior month’s figures, there were higher price pressures for recreation and culture (+2.7% in annual terms vs +2.5% in February), transportation (+4.7% vs +2.4% in February) and food and non-alcoholic beverages (+3.7% vs +3.3% in February).
Meanwhile, core consumer prices were up 3.1% on a year-on-year basis in March, following a 3.2% increase in the prior month.
Lastly, consumer prices increased 0.67% in March in month-on-month terms, following a 0.42% increase in the prior month.
Panelist insight: On the implications for monetary policy, Nomura analysts said:
“CPI inflation is set to fall in April, as the household energy price cap is lowered, more than offsetting the rise in petrol/diesel prices. But the cap will reset higher from July and that is likely to push inflation up then. […] While we had been talking of the need for rate cuts before the US/Iran war began (recall financial markets had been pricing in over 50bp of easing by end-2026 on 27 February, the day before the war began), it remains the case that services inflation is being slow to normalise. Combined with higher energy prices and the risk to inflation expectations from that source, there are clear risks to the upside to BoE policy in the near term”