UK inflation falls as some food prices drop

Inflation has fallen to its lowest level in two and a half years, mainly due to slowing food price increases.

Prices for some items including meat, crumpets, chocolate biscuits, furniture and household goods fell. However, petrol and diesel prices rose.

A decline in the inflation rate does not mean that prices overall are falling; they are simply rising at a slower rate.

Although overall inflation has fallen, goods in stores are still much more expensive than they were two years ago.

Due to the fall in pork prices, meat prices fell by 0.5% from February to March, compared with a 1.4% increase in the same period last year. This means the rate of increase in meat prices slowed further in the year to March, to 3.1%, the lowest level since November 2021.

Prices of household goods such as furniture and cleaning supplies also fell by 0.9% in the year to March.

The main cause of high inflation in the UK in recent years is the soaring cost of food and utilities.

Inflation has been gradually declining since peaking at 11.1% in late 2022 in the aftermath of the coronavirus, when demand for goods surged as factories struggled to meet increased demand. .

Oil and gas also saw demand rise after the pandemic, and prices soared again when Russia invaded Ukraine and global supplies dwindled. The conflict has also reduced grain sales, causing food prices to soar.

This pushed food and non-alcoholic beverage inflation to nearly 20% last year, the highest level since the 1970s.

Miles Johnson is a student in London who buys more to get the best price possible.

“I go to multiple places to get the best deal. Sometimes I choose to work from home just because it’s cheaper to eat at home and I don’t have to pay for transportation. There is,” he said.

He said he was certainly feeling the strain of high prices and did not feel the situation was getting any more manageable.

Inflation was slightly higher than economists expected in March, but experts said the Bank of England was unlikely to change its forecast for a rate cut later this year, possibly as early as June.

Yael Selfin, chief economist at KPMG UK, said he expects inflation to return to the 2% target later this spring, adding: “This increases the likelihood of rate cuts from June onwards.”

Prime Minister Jeremy Hunt described the latest official figures as “welcome news”.

He said that with falling inflation and the government’s recent cuts to national insurance for employed and self-employed people (coming into effect on 6 April), “people will start to feel the difference, not just their paycheck. There is a need.”

“It’s a very difficult situation and we’ve been through a very difficult period,” Mr Hunt told the BBC from the US, where he was meeting with key business leaders. But he insisted the UK was emerging from a difficult period and that “the fundamentals of the UK economy are actually very strong”.

But Labour’s Shadow Chancellor Rachel Reeves said conditions for working people would still worsen.

He said: “In-store prices remain high, monthly mortgage bills are rising and inflation remains above the Bank of England’s target.”

Liberal Democrat Treasury spokeswoman Sarah Olney said: “No one will ever know they have this in their pocket. By slapping themselves on this record, Rishi Sunak and Jeremy Hunt will “We proved how out of line we are.”

The bank will make its next interest rate decision on May 9th. The Bank of England has been raising interest rates to curb price rises, and interest rates are currently at their highest level in 16 years.

The theory is that when people borrow more, they either have less money to spend, or they may choose to save more as savings rates rise. This reduces the demand for goods and helps reduce inflation.

Central Bank Governor Andrew Bailey said on Tuesday the question was how much more evidence was needed before starting to cut interest rates in the coming months.

US consumer prices rose faster than expected last month, and UK inflation fell below the US rate for the first time since early 2022.

Some experts say this could lead to the Bank of England being the first bank in the United States to cut interest rates.

Both countries’ central banks, like those in Europe, have raised interest rates over the past few years as inflation soars, but interest rates have been direction may be different.

Ian Stewart, Deloitte’s chief economist, said that although inflation may be “reversing” in the UK, “the Bank of England is not yet convinced that inflation has been defeated”.

He said the central bank is in no hurry to cut interest rates as people’s wage growth remains higher than expected and the economy is recovering.

On Wednesday, separate ONS figures showed private rents rose by 9.2% in the 12 months to March and now average £1,285 in England.

Looking back at next month’s April, the overall inflation rate is expected to show an even bigger decline given the lower energy price ceiling, even though household direct borrowing remains at a high level.