CPI inflation fell from 3.4% in February to three.2% in March, its lowest degree for 2 and a half years, in accordance with ONS figures printed at this time.
Falls in meals costs had been the most important issue within the fall, information which is able to cheer many stretched households.
Meals inflation fell to 4%, compared to 19.2% in March 2023.
Nonetheless, Grant Fitzner, chief economist for the ONS, mentioned decrease meals prices had been partially offset by rising gasoline costs.
Chancellor Jeremy Hunt mentioned 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 private finance at Hargreaves Lansdown, mentioned at this time’s ONS figures can be welcome information for savers.
She mentioned: “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 an honest margin.
“Simple-access charges have been significantly sturdy 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 really seen two-year fastened charges rising.
“These offers aren’t going to final without end. As inflation comes underneath management, banks will value 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 biggest declines occurring within the fastened time period deposit house.”
Danni Hewson, head of economic evaluation at AJ Bell, warned that regardless of the optimistic information there have been nonetheless some troubling figures in at this time’s ONS report.
She mentioned: “Inflation is transferring in the proper path 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 manner they had been this time final 12 months.
“Subsequent month ought to look even higher because the falling power value 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 number of troubling points, notably the stickiness of service sector inflation. This might be exacerbated by the rise within the Nationwide Dwelling Wage which is placing strain on many companies to hike costs once more to stability their books.”
Rob Clarry, funding strategist at Evelyn Companions, agreed that the Financial institution of England will wish to see a drop in service sector inflation earlier than committing to reducing the bottom charge.
He mentioned: “The companies part of CPI inflation stays elevated at an annual 6%, which was above the 5.8% anticipated – and the Financial institution of England will wish to see extra progress on this measure earlier than they decide to a charge reducing cycle.
“Regardless of softer home circumstances, the Financial institution’s financial coverage committee will likely be cautious about reducing within the face of upper US rates of interest. As a smaller however open financial 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 strain on UK authorities bond yields.
“Chopping rates of interest on this setting would doubtless result in sterling deprecation, which might, in flip, result in increased import costs and put upward strain on UK inflation. As we enter the summer time months, the Financial institution will proceed to face a tough balancing act between development on one facet and inflation on the opposite.”
He added that Evelyn Companions doesn’t count on to see a base charge reduce till the second half of this 12 months.
