Achi news desk-
London: Britain’s annual inflation rate fell less than expected last month, according to official data on Wednesday that could cloud the outlook for a rate cut and cause more pain for the government.
The consumer price index fell to 3.2 percent in March, the lowest level since September 2021, the Office for National Statistics (ONS) said.
Markets, however, were expecting a 3.1 percent rate in March.
Inflation rose by 3.4 per cent in the 12 months to February, the ONS added in a statement.
“Inflation eased slightly in March to its lowest annual rate in two-and-a-half years,” ONS chief economist Grant Fitzner said.
“Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago.
“Like last month, we saw a partial offset from the increase in fuel prices,” he added in the ONS release.
Chancellor of the Exchequer Jeremy Hunt described the latest drop as “welcome news”.
But inflation remains well above the Bank of England’s two percent target as millions of Britons wait to see when it will start cutting interest rates to ease the cost-of-living crisis.
Ruth Gregory, UK deputy chief economist at Capital Economics, said the smaller-than-expected fall “raises the risk that inflation will follow the trend in the US and stall soon.”
“The chance that the interest rate will be lowered for the first time in June is now a bit weaker,” she noted.
Other analysts said a June cut remained a strong possibility.
“Today’s data is unlikely to move the needle for the Bank of England,” said Yael Selpin, chief economist at KPMG UK.
“The overall outlook for inflation remains generally positive, however there are several risks that could cause a pullback.
“Oil prices have risen over the past month, which has led to an increase in prices at the pump for consumers,” she added.
The Conservative government, led by Prime Minister Rishi Sunak, is meanwhile banking on falling inflation as it lags badly in polls ahead of this year’s general election.
