UK inflation falls to 2.8%
Fall in inflation offers scant relief for the chancellor as the real litmus test for inflation will take place in the coming months.
26th March 2025 08:24
by Myron Jobson from interactive investor
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The lower than expected fall in inflation offers scant relief for the chancellor ahead of the Spring Statement as the real litmus test for inflation will take place in the coming months, following rises in utility and other household bills in April and once the impact of President Donald Trump’s tariff wars starts to filter through.
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“The dip in inflation in February was largely down to the discounting of clothing items, which is a volatile component. It reflects bumpier progress on inflation’s path back to the Bank of England’s 2%, with the inflation landscape becoming increasingly uncertain as various economic factors begin to take effect. The UK's central bank has warned that inflation could spike to 3.7% later this year before falling.
“Looking beyond the headline figure, the continued easing of core inflation, which strips out volatile food and fuel costs to gain a clearer sense of the underlying trend, could offer some assurance to the Bank of England to cut interest rates in May.
“The triple threat of higher prices, sluggish economic growth, and elevated interest rates remains a key concern for the chancellor, which threatens to put more strain on both public and personal finances.
“It is important to remember that inflation affects everyone differently. We all have a personal inflation rate because our spending habits vary. Depending on the goods and services you buy, your personal inflation rate may be lower - or higher - than the headline figure.”
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