UK inflation falls to 2.6%
‘Calm before the storm’ as triple threat of headwinds could prolong return to normal inflation, writes Myron Jobson.
16th April 2025 08:05
by Myron Jobson from interactive investor
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The cooling of inflation in March is a welcome development, but it could be the calm before the storm, as increases in utility bills, the rise in national insurance contributions paid by employers, and the impact of President Donald Trump’s tariff wars start to filter through from April.
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“This triple threat of headwinds could mean that the road back to the Bank of England’s 2% inflation target is longer and includes further twists and turns.
“March’s softer inflation data was driven by a drop in the cost of recreation and cultural activities, as well as falling petrol prices and a decrease in housing and household services due to lower energy costs. Core CPI, which strips out volatile food and fuel prices to provide a clearer picture of the underlying trend, continued its downward trajectory, easing slightly to 3.4% from 3.5% in February.
“The big question for the Bank of England is how to balance the risk of inflation rising again with the need to stimulate greater economic growth - and what that means for interest rates. A rate cut in May seems increasingly nailed on, and the market has priced in further cuts amid concerns of an economic slowdown triggered by tariffs.
“Staying on top of your finances is key to building financial resilience, especially as the ebb and flow of inflation continues to reshape the cost-of-living landscape.”
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