Inflation Rate Decrease: March 2024

Last week the Office for National Statistics (ONS) reported a further drop in inflation to 3.2% for March 2024.

Bank of England Governor Andrew Bailey remains unperturbed by a modest decline in inflation, and expects a sharp fall towards the government’s 2% target next month.

“We are pretty much on track with where we thought we would be – a bit under in February and a bit over in the latest figures. Next month will see quite a strong drop.”

Market sentiment suggests that this data might postpone anticipated interest rate reductions.

The report summarised:

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.8% in the 12 months to March 2024, unchanged from February.

• On a monthly basis, CPIH rose by 0.6% in March 2024, compared with a rise of 0.7% in March 2023.

• The Consumer Prices Index (CPI) rose by 3.2% in the 12 months to March 2024, down from 3.4% in February.

• On a monthly basis, CPI rose by 0.6% in March 2024, compared with a rise of 0.8% in March 2023.

• The largest downward contribution to the monthly change in both CPIH and CPI annual rates came from food, with prices rising by less than a year ago, while the largest, partially offsetting, upward contribution came from motor fuels, with prices rising this year but falling a year ago.

• Core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.7% in the 12 months to March 2024, down slightly from 4.8% in February; the CPIH goods annual rate slowed from 1.1% to 0.9%, while the CPIH services annual rate was unchanged at 6.0%.

• Core CPI (excluding energy, food, alcohol and tobacco) rose by 4.2% in the 12 months to March 2024, down from 4.5% in February; the CPI goods annual rate slowed from 1.1% to 0.8%, while the CPI services annual rate eased slightly from 6.1% to 6.0%.

Source: ONS