Falling petrol prices drove UK inflation down by more than expected in the year to March.
Inflation was 2.6%, down from a rate of 2.8% in February, according to official data.
But the fall may only be temporary as analysts say it’s expected to spike from April as rising bills and higher business costs take hold.
“The only significant offset came from the price of clothes which rose strongly this month,” said Grant Fitzner, chief economist at the Office for National Statistics (ONS).
The average price of petrol fell by 1.6p per litre between February and March to 137.5p per litre.
The inflation decrease was also driven by a drop in recreation and culture prices, with toys, games, and hobbies falling particularly sharply.
The fall in inflation means that, although prices continue to rise, the pace is slowing. Price rises have slowed from highs seen in recent years.
Wages continue to outpace inflation with salary raises for public sector workers growing more than those in the private sector.
The average rise in wages was 5.9%, data released by the ONS on Tuesday showed.
In the year to January 2016, inflation was 0.3%. It then rose to around 3% in late-2017 before falling back closer to 0% in late-2020. From there, it began to rise sharply, hitting a high of 11.1% in October 2022, and then fell to a low of 1.7% in September 2024. In the year to March 2025, it was to 2.6%, down slightly from 2.8% the previous month.
In May, the inflation figure for April will likely be pushed to around 3% due to increases in gas prices, electricity prices, and water charges, said Michael Saunders, senior advisor at Oxford Economics.
“We may get a diversion of cheap exports which might have otherwise gone to the US, will start to come to Europe and the UK,” he said.
“Perhaps not as high as the Bank of England had feared a few months ago, but the economy will be weaker, with exports and investment and consumer spending all hit and unemployment starting to rise”.
He added that another side-effect of Trump’s trade war is hitting global growth, which causes oil prices to fall, which will feed through to lower petrol prices here in the UK.
Credit: BBC
