UK inflation falls to the lowest level since September 2021
While the drop in inflation is happening it is not happening as fast as economists and the Bank of England suggested it may. This could well keep UK rates higher for longer.
Headline consumer prices fell to 3.2, easing pressure on households amid the cost of living crisis, down from 3.4% last month, but higher than the 3.1% year on year expected. The core rate, without food and fuel, registered 4.2%, down from 4.5 but not as low as the 4.1%forecast. Retail prices similarly, April's reading was at 4.3%, down from 4.5% but not as low as the consensus 4.2%. Interestingly input producer prices are far lower than expected at a -2.5, down from -2% in February - this suggests that there should remain a downward trajectory on core inflation in the months and quarters ahead. Producer output numbers were up 0.6%, year-on-year, well below expectations for a 1.4% rise.
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The UK's inflation rate
The UK's inflation rate for March showed a decrease to 3.2%, the lowest since September 2021, signaling a gradual easing in the cost of living crisis. Despite this decline, the rate didn’t fall as much as economists anticipated, with both the headline CPI and core inflation rate (excluding food and fuel) surpassing expectations. Input producer prices suggest possible future reductions in core inflation, and PPI output was significantly lower than projected, indicating less pressure on future consumer prices.
GBP
The Sterling showed resilience, appreciating against the US dollar following the release, hinting at market optimism or a corrective adjustment in response to recent declines.
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