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United Kingdom Inflation March 2024

United Kingdom: Inflation falls to over two-year low in March

Inflation ticked down to 3.2% in March from February’s 3.4%. March’s result marked the lowest inflation rate since September 2021. The figure was largely driven by softer increases in prices for food and recreation and culture. That said, headline inflation was still above the Bank of England’s 2.0% target and market expectations.

In addition, the trend pointed down, with annual average inflation coming in at 5.7% in March (February: 6.2%). Meanwhile, core inflation fell to 4.2% in March, from February’s 4.5%.

Lastly, consumer prices increased 0.59% from the previous month in March, matching February’s reading.

Inflation should fall sharply in Q2 to around the Bank’s target, thanks to a roughly 12% fall in the energy price cap in April. Our Consensus is then for inflation to stay close to 2.0% in subsequent quarters, which should unlock monetary policy easing.

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