UK inflation continued its gradual decline in March, offering a short-term boost to retailers and consumers, according to the latest figures released by the Office for National Statistics (ONS).
The Consumer Prices Index (CPI) fell to 2.6% in March, down from 2.8% in February, inching closer to the Bank of England’s 2% target. Food inflation also eased, dropping to 3.0%, providing welcome relief for households following months of high prices.
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Energy and fuel prices lead decline
The dip in headline inflation was largely driven by steady energy costs and falling petrol prices, the ONS reported. While energy prices remained broadly unchanged, petrol and diesel prices saw notable reductions compared with the same time last year, contributing to the slowdown in overall inflation.
Retailers also played a role in the easing, with continued discounting and promotional campaigns helping keep price rises in categories such as clothing and footwear to a minimum.
These efforts are part of an ongoing strategy by the retail sector to support consumer spending amid economic uncertainty.
Easing food inflation offers limited comfort
Food inflation, while still elevated, has moderated, giving some relief to consumers. The fall was driven by month-on-month price decreases in sweet items, including sugar, jam and honey.
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By GlobalDataHowever, the British Retail Consortium (BRC) warned that the drop comes after sharp increases in recent months, and that pressures on food supply chains remain due to poor harvests and high global commodity prices.
Kris Hamer, Director of Insight at the BRC, noted, “Having jumped significantly in recent months, consumers will welcome news that food inflation decreased, despite some extreme weather, poor harvests and high commodity prices.”
Future pressures on prices remain
Despite March’s modest improvement, analysts have cautioned against reading too much into the figures. Inflation is expected to come under renewed pressure in April as new cost increases begin to feed through the economy.
Higher National Insurance contributions for employers and the recent rise in the National Living Wage are likely to add to retailers’ operational costs. These, in turn, may lead to further price rises in the months ahead, potentially limiting the benefits of March’s figures.
Hamer added that government support remains crucial: “To protect households, it is essential the government limits the burden on the industry in other areas, ensuring no shop pays more as a result of the upcoming business rates reform.”
As inflation edges lower, businesses and consumers alike face a delicate balance between temporary relief and long-term challenges, with April’s data expected to provide a clearer picture of the road ahead.
