The Office for National Statistics (ONS) has released its latest inflation figures, revealing a slight decrease to 3.2% in March, falling short of economists’ forecasts. This marks the lowest annual rate in two and a half years, significantly down from the peak observed at 11.1% in October last year. Food prices played a significant role in driving inflation down, while rising fuel prices provided a partial offset. Core CPI inflation, which excludes energy, food, alcohol, and tobacco, decreased to 4.2%, down from 4.5% in February, with the CPI services rate also showing a decline to 6% from 6.1%.

Grant Fitzner, ONS Chief Economist, commented on the March inflation figures, highlighting the role of food prices in the overall decline, coupled with the partial offset from rising fuel prices. Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), welcomed the fall in the annual consumer price inflation rate, noting its positive impact on small businesses grappling with rising costs. McKenzie emphasized the need for continued support for small firms amid economic uncertainties, calling for policies that foster growth, innovation, and job creation.

Dr. Roger Barker, Director of Policy at the Institute of Directors, underscored the persistent challenges posed by high service sector inflation, despite notable declines in food and clothing inflation. Barker noted the gradual decline in inflation toward the Bank of England’s 2% target and advocated for a rate cut at the next Monetary Policy Committee meeting to further alleviate inflationary pressures.

The responses from business leaders highlight the importance of monitoring inflation trends and implementing supportive policies to bolster economic resilience and facilitate growth in the face of ongoing challenges. As inflation continues its downward trajectory, businesses remain vigilant and call for concerted efforts to sustain momentum toward a more stable and prosperous economic environment.

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Last Update: April 17, 2024