CPI inflation fell from 3.4% in February to three.2% in March, its lowest stage for 2 and a half years, in keeping with ONS figures printed right now.
Falls in meals costs had been the largest issue within the fall, information which can cheer many stretched households.
Meals inflation fell to 4%, compared to 19.2% in March 2023.
Nonetheless, Grant Fitzner, chief economist for the ONS, stated decrease meals prices had been partially offset by rising gasoline costs.
Chancellor Jeremy Hunt stated that folks ought to begin to really feel the distinction of decrease inflation.
CPI inflation dropped sharply in February to three.4% from 4% in January.
Inflation has been slowly falling because it peaked in late 2022.
RPI inflation, the older measure of inflation, fell from 4.5% in February to 4.3% in March.
Sarah Coles, head of non-public finance at Hargreaves Lansdown, stated right now’s ONS figures could be welcome information for savers.
She stated: “With inflation at 3.2%, there are financial savings and money ISA charges which beat inflation in each market – from easy-access to the longest fastened charge financial savings offers. There are nonetheless easy-access accounts and shorter-term fastened charges providing greater than 5% – to allow them to beat it by a good margin.
“Simple-access charges have been notably robust in 2024, regardless of having softened in March, with the highest of the market falling 10 foundation factors. In the meantime, one-year fastened charges stayed comparatively regular in March, and we’ve truly seen two-year fastened charges rising.
“These offers aren’t going to final ceaselessly. As inflation comes underneath management, banks will worth in additional charge cuts, and financial savings offers will drop. Over the previous quarter, we’ve already seen financial savings charges fall throughout the board, with the most important declines occurring within the fastened time period deposit area.”
Danni Hewson, head of monetary evaluation at AJ Bell, warned that regardless of the optimistic information there have been nonetheless some troubling figures in right now’s ONS report.
She stated: “Inflation is transferring in the proper route and anybody who has wheeled a trolley round a grocery store over the previous few weeks may have observed that costs aren’t delivering these checkout shocks in the identical means they had been this time final yr.
“Subsequent month ought to look even higher because the falling power worth cap is lastly counted within the numbers, even when many households received’t have observed a lot distinction to their outgoings as their direct debits stay elevated to repay excellent balances.
“However even on this set of figures there are a couple of troubling points, notably the stickiness of service sector inflation. This may very well be exacerbated by the rise within the Nationwide Residing Wage which is placing stress on many companies to hike costs once more to steadiness their books.”
Rob Clarry, funding strategist at Evelyn Companions, agreed that the Financial institution of England will need to see a drop in service sector inflation earlier than committing to reducing the bottom charge.
He stated: “The companies element of CPI inflation stays elevated at an annual 6%, which was above the 5.8% anticipated – and the Financial institution of England will need to see extra progress on this measure earlier than they decide to a charge reducing cycle.
“Regardless of softer home situations, the Financial institution’s financial coverage committee can be cautious about reducing within the face of upper US rates of interest. As a smaller however open economic system, the UK is uncovered broader international financial forces, and this has been on show in latest weeks as US bonds yields have risen amidst sticky inflation, which has positioned upward stress on UK authorities bond yields.
“Reducing rates of interest on this surroundings would possible result in sterling deprecation, which might, in flip, result in larger import costs and put upward stress on UK inflation. As we enter the summer season months, the Financial institution will proceed to face a troublesome balancing act between progress on one facet and inflation on the opposite.”
He added that Evelyn Companions doesn’t count on to see a base charge minimize till the second half of this yr.
