UK inflation slows further to 2.6%

UK inflation slowed for the second month in a row in March, according to official figures.

The rate of Consumer Prices Index (CPI) inflation eased to 2.6% for the month, from 2.8% in February, The Office for National Statistics (ONS) said.

It was a steeper fall than predicted by economists, who had expected a reading of 2.7% for March, and marks the lowest reading since December 2024.

The bigger-than-expected drop in inflation will be positively received by Chancellor Rachel Reeves, as it moves closer to the Bank of England’s 2% target rate.

The reading is also likely to increase calls for interest rates – which are typically kept high to help bring inflation down – to be reduced from their current rate of 4.5% at the Bank’s next rate-setting meeting in May.

However, economists have predicted that inflation will shoot higher in April after a raft of consumer bill increases – such as energy and water prices – as well as the potential impact of higher taxes and labour costs for businesses, which are likely to pass some costs on to customers.

"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," Reeves said.

The ONS’s preferred measure of inflation, Consumer Prices Index including owner occupiers’ housing (CPIH), eased back to 3.4% for March, from 3.7% the previous month.

Meanwhile, the Retail Prices Index (RPI) rate of inflation declined to 3.2% from 3.4%.