Chancellor of the Exchequer, , said:
“Inflation falling for two months in a row, wages growing faster
than prices and positive growth figures are encouraging signs
that our Plan for Change is working, but there is more to be
done.
"I know many families are still struggling with the cost of
living and this is an anxious time because of a changing world.
That is why the Government has boosted pay for three million
people by increasing the minimum wage, frozen fuel duty and begun
rolling out free breakfast clubs in primary schools."
Resolution
Foundation
CPI inflation dipped in March – falling by 0.2 percentage points
to reach 2.6 per cent – but huge global forces will shape changes
in the cost of living in the coming months, the Resolution
Foundation said today (Wednesday).
This drop is welcome, exceeding the expectations of both the
market and the Bank of England (of 2.7 per cent). The main
drivers of the fall were petrol, alongside welcome reductions in
both overall services and goods inflation. Offsetting this was an
unusual rise in erratic clothing and footwear prices.
Despite this good news, inflation will be going up next month:
CPI is expected to jump by around 0.9 percentage points in April,
almost entirely driven by energy prices which are set to rise by
6 per cent as the Ofgem price cap increases.
Bill increases are particularly concerning to low-to-middle
income households, for whom energy spending took up nearly twice
as much of their total consumption in 2022-23 as it did for
high-income households (11 per cent compared to 6 per cent).
These persistent pressures on core costs are hitting household
budgets that are already stretched, with food insecurity recently
reaching rates of 11 per cent (in 2023-24).
Looking further ahead, the fast-changing situation around global
trade has increased uncertainty about where inflation goes next.
There is good reason to think President Trump's tariffs will
bring inflation down in the near term – due to lower oil prices
(Brent crude is down more than 10 per cent since the start of
April) and trade diversion.
Lower inflation will make it easier for the Bank of England to
cut rates in the coming months. But this more benign picture
could easily change if a trade war materialises, with higher
tariffs globally leading to renewed upward pressure on inflation,
hitting poorer households already struggling with the high cost
of living.
James , Research Director at the Resolution
Foundation, said:
“There was a welcome dip in inflation in March, with CPI reaching
2.6 per cent. But this fall – partly driven by petrol and
services – comes among overwhelming uncertainty as to where
inflation goes from here.
“Although inflation will rise sharply in April, reflecting an
increase in the Ofgem price cap, the truth is that the outlook
for UK inflation hinges on President Trump's tariff policies.
“Global trade uncertainty could drive down our prices, with oil
already down more than 10 per cent since the start of April – but
a global trade war would create renewed inflation, increasing
pressure on British families already struggling with the cost of
living.”
