Inflation in the UK has fallen back in the year to March but remains in double digits at 10.1%, the Office for National Statistics (ONS) has revealed.

The latest consumer prices index (CPI) data confirmed that the rate of inflation had decreased from 10.4% in the year to February, back to the level it was in January at 10.1%. CPI inflation in the UK hit a recent peak of 11.1% in October last year.

On a monthly basis, inflation climbed by 0.8% in March 2023, which compares with a rise of 1.1% in March 2022.

The ONS reported that largest downward contributions to the monthly change in the CPI annual rate came from motor fuels, and housing and household services, particularly liquid fuels. It was partially offset by upward contributions from food, as well as recreation and culture.

Managing director of capital markets and finance at LiveMore, Simon Webb, said that despite a fall in inflation, the UK economy is “not out of the woods yet”.

“Inflation has been in double digit figures since last September and it is still stubbornly there but a fall, even if only by 0.3%, is better than nothing,” Webb said. “Let’s hope this is the start of the downward trajectory towards the 2% target.
 
“But we are not out of the woods yet. Food inflation is still exceptionally high, as are energy prices although they have come down, but the energy market is very volatile so there is still price uncertainty. On the other hand, the fall in the cost of petrol bodes well for inflation if it continues to drop.
 
“Looking to what this will do with regards to the BoE base rate decision next month, the Bank has said it will be data driven and the next meeting is still a number of weeks away, but it is safe to say the days of higher interest rates will be around for quite a while yet.”

CEO at fintech broker Loan.co.uk, Paul McGerrigan, commented: “Many in the UK, not least at Number’s 10 and 11, will breathe a sigh of relief at the news inflation is back on a moderate downward trajectory following February’s shock increase.”

He added: “We expect the UK economy is heading for an upturn, with much lower inflation and perhaps even interest rate reductions in the latter part of this year but after the events of the last three years nothing can be taken for granted. It’s still a bumpy path for borrowers and expert financial advice is critical.”

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