The U.Okay.’s Client Costs Index (CPI) inflation fee dropped to 2.6% in March, down from 2.8% in February, in response to information launched by the Workplace for Nationwide Statistics (ONS) right this moment. This marks the bottom inflation studying since December and is available in beneath economists’ expectations of two.7%.
Key factors from the ONS report:
- Headline CPI fell to 2.6% in March from 2.8% in February
- Core inflation (excluding meals, power, alcohol and tobacco) eased to three.4% from 3.5%
- Providers inflation decreased notably to 4.7% from 5.0%
- Recreation and tradition, motor fuels, and eating places and motels contributed to the slowdown
- Clothes and footwear costs rose, offering the biggest offsetting upward impact
Hyperlink to ONS report (March 2025)
“Inflation eased once more in March, pushed by a wide range of elements together with falling gasoline costs and unchanged meals prices in contrast with the value rises we noticed this time final 12 months,” ONS Chief Economist Grant Fitzner mentioned. The typical value of petrol fell by 1.6 pence per litre between February and March to 137.5 pence per litre, down from 144.8 pence per litre in March 2024.
The drop in providers inflation to 4.7% is especially important because it’s a key metric watched by the Financial institution of England for indicators of persistent value pressures within the financial system.
Market Reactions
British pound vs. Main Currencies: 5-min
Overlay of GBP vs. Main Currencies Chart by TradingView
The British pound confirmed a muted response to the inflation information, buying and selling choppily with no clear directional bias instantly following the discharge. Whereas GBP initially strengthened towards some main currencies, the strikes have been modest all through early London session commerce.
GBP began to show barely decrease forward of the U.S. session, probably on merchants rising their bets on rate of interest cuts following the discharge, now pricing in not less than three quarter-point reductions by the tip of the 12 months, with the primary minimize extensively anticipated on the Financial institution of England’s subsequent assembly on Could 8.
We additionally noticed a normal rise in broad risk-off sentiment as world tariff tensions continued to escalate on the session, this time sparked by information of the U.S. authorities requiring Nvidia a license to export to China and China demanding extra respect from the U.S. Threat aversion might have introduced some strain to GBP as nicely given its ordinary tendency to behave as a beta foreign money in most broad market danger phrases (i.e., falls when broad danger sentiment is web adverse and vice versa).
The comparatively subdued market response doubtless displays that whereas the inflation studying was barely higher than anticipated by way of inflation transferring in the best course for financial resilience, buyers are already targeted on the April inflation information, which is able to seize the influence of varied value will increase that took impact at the beginning of the fiscal 12 months.
