Inflation fell in March but remained above 10%

Inflation in March continued to remain above 10% according to the latest Consumer Price Index (CPI) data from the Office of National Statistics (ONS), despite a slight fall on the February’s figure.

The ONS found that in March 2023, the average price of goods monitored rose by 10.1% compared to March last year. This represents a 0.3-percentage point drop on February’s figure, and remains below the peak inflation seen in last year.

Food prices were found to be the main upward contributor to high inflation again, with prices for food and drink up 19.2% on March 2022 – inflation for this category of goods is now understood to be at its fastest rate since the late 1970s.

Prices of motor fuels however continued to fall, despite the increase in oil and gas prices as a result of the Russian invasion of Ukraine last Spring being among the accelerators of high inflation worldwide as sanctions were imposed in response to Russian aggression. Average petrol and diesel prices stood at 146.8 and 166.5 pence per litre, respectively, in March 2023, 5.9% lower than prices seen at the pump this time last year.

Continued double-digit inflation now sees the UK have one of the highest rates of inflation of the world’s major economies, with France (6.6%), Germany (7.8%) and the USA (5.3%) all recording steeper declines. Attention will now turn to the Bank of England, which is expected to make a further decision on interest rates at the beginning of May – after February’s CPI data showed a surprise increase, the Bank’s Monetary Policy Committee voted in favour of a small rise in the Bank’s base rate when it had previously been predicted to hold rates for the first time in over a year.

March’s CPI data will be the last to use the ONS’s 2022 basket of goods to assess inflation against a range of common consumer purchases. The updated basket for 2023, announced earlier this month, will include for the first time frozen berries, home security cameras and e-bikes in the over-700 products and services used to calculate inflation. Meanwhile, the ONS has removed outdated technology from its basket, including non-chart CDs and compact digital cameras in response to consumers’ adoption of alternatives available from their smartphone.