UK inflation dips to 2.6% in March but Britons warned 'calm before storm'

UK marginally dropped in the year to March, but Britons have been warned that it could be "the calm before the storm" of April price hikes. Consumer Prices Index (CPI) inflation rose to 2.6% in the 12 months to March, down from 2.8% in February, the Office for National Statistics (ONS) has said.

ONS chief economist Grant Fitzner said: "Inflation eased again in March, driven by a variety of factors including falling fuel prices and unchanged food costs compared with the price rises we saw this time last year. The only significant offset came from the price of clothes, which rose strongly this month, following the unusual decrease in February." Average and prices dropped by 1.6p in March to 137.5p and 144.8p per litre, respectively, marking an overall drop of 5.3% in the year to March. Meanwhile, clothing and footwear prices rose by 1.1%, compared with a fall of 0.6% in the 12 months to February.

Today's figure marks the lowest reading since December and a steeper drop than predicted by economists, who had expected a reading of 2.7%.

Chancellor said: "Inflation falling for two months in a row, wages growing faster than prices, and positive growth figures are encouraging signs that our plan for change is working, but there is more to be done.

She added: "I know many families are still struggling with the cost of living and this is an anxious time because of a changing world. That is why the Government has boosted pay for three million people by increasing the minimum wage, frozen fuel duty and begun rolling out free breakfast clubs in primary schools."

Economists view this as a temporary reprieve, with prices expected to pick up pace this year due to the Chancellor's Budget measures.

Robert Wood, chief UK economist at Pantheon Macroeconomics, said it would be "the calm before the storm of April price hikes, which should drive up headline inflation to 3.6%".

Harry Mills, director at added: "Crucially, these data are before the effects of April's tax rises and any tariff-related inflationary effects. So, whilst this is objectively good news for the , the government and the Bank of England, we can't look at this trend continuing lower with any degree of certainty given the inflationary headwinds we face."

However, others argue the figures may "seal the deal" for the to cut interest rates in May.

Core inflation, which monitors the change in prices of goods and services - excluding those from the food and energy sectors - has slowed in pace. According to ONS, Core CPI rose by 3.4% in March, down slightly from 3.5%.

The core inflation rate is a metric used to determine the impact of rising prices on consumer income. The Bank of England takes this number - along with the CPI - into consideration when deciding whether to adjust .

Rohit Kohli, director at said: "Another fall in inflation will all but seal the deal on a May rate cut. With CPI now at 2.6% and core inflation slowly heading in the right direction, the Bank of England is rapidly running out of excuses to keep rates where they are."

Adam Stiles, managing director at said: "This is really exciting news, especially for borrowers. One of the key contributing factors to the Bank of England holding base rate at the last MPC meeting was inflation. With this dropping more than expected, a base rate cut at the next meeting looks even more likely. All eyes will be focused on the SWAP markets in the lead up to the May Bank of England rate decision."

Ben Perks, managing director at added: "It's time for the Bank of England to get the scissors out. Could we now be looking at a 0.5% trim? This is great news for borrowers and it'll be great to see how swap rates and lenders react this morning."

However, Riz Malik, director at noted that the Bank may hesitate to go beyond a 0.25% reduction, concerned the dip in inflation could be short-lived. He added: "With rising energy costs and Trump's tariffs, future increases in inflation are likely."