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United Kingdom Inflation March 2023

United Kingdom: Inflation drops in March

Inflation ticked down to 10.1% in March, following February’s 10.4%. The result was driven by moderating price pressures for transportation and housing and utilities. However, food price growth accelerated, and the headline result was well above market expectations.

Annual average inflation ticked up to 10.0% in March (February: 9.8%). Meanwhile, core inflation was stable, coming in at February’s 6.2% in March, also above market expectations. Lastly, consumer prices increased 0.76% in March over the previous month, coming in below February’s 1.14% rise.

Together with a recent uptick in wage growth and solid labor market data, March’s inflation readings raise the chance of further monetary tightening at the Bank of England’s May meeting.

ING’s James Smith said:

“The above-consensus reading on core inflation means another 25bp rate hike from the Bank of England next month is now more likely than not. […] it is core goods inflation that is proving much stickier than expected. In part that’s thanks to some pockets of strength in areas like clothing and furniture, which have helped slow what otherwise had been a clear disinflationary trend in durable goods.”

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