UK consumer price inflation sinks to lowest rate in a year

Written by Oliver Wade

UK consumer price inflation fell in March to 2.5%, the lowest rate seen in 12 months, according to the Office for National Statistics.

It fell from 2.7% in February after prices for women’s clothing increased at a slower pace than it did last year. The data suggests that the squeeze on UK households may be coming to an end as wages rise.

Despite the fall in inflation, many economists still expect the Bank of England to increase its base rate from 0.5% to 0.75% in May.

Hargreaves Lansdown senior analyst Laith Khalaf said that, while he expected the Bank of England to increase interest rates, he thinks that the Monetary Policy Committee will proceed slowly.

“Wage growth remains surprisingly lacklustre in the face of such low levels of unemployment, though it is now heading in the right direction, and the recent political shift on public sector pay suggests there’s some more momentum in the post,” Khalaf added.

“While an interest rate rise now looks odds on in May, the Bank will still be wary of moving too fast and too soon, so beyond that monetary policy is still likely to move at a slovenly pace.”

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