The headline rate of inflation fell from 3.4 per cent in February to 3.2 per cent in March.
The news suggests the cost of living squeeze continues to ease with increases in prices below rises in wages.
The figures come from the Office for National Statistics (ONS), whose chief economist Grant Fitzner said: “Inflation eased slightly in March to its lowest annual rate for two and a half years.
“Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago.
“Similarly to last month, we saw a partial offset from rising fuel prices.”
Core CPIH (excluding energy, food, alcohol and tobacco) rose by 4.7 percent in the 12 months to March 2024, down slightly from 4.8 percent in February; the CPIH goods annual rate slowed from 1.1 percent to 0.9 percent, while the CPIH services annual rate was unchanged at 6.0 percent.
Core CPI (excluding energy, food, alcohol and tobacco) rose by 4.2 percent in the 12 months to March 2024, down from 4.5 percent in February; the CPI goods annual rate slowed from 1.1 percent to 0.8 percent, while the CPI services annual rate eased slightly from 6.1 percent to 6.0 percent.
Andy Mielczarek, founder and CEO of SmartSave, a Chetwood Financial company, said: “A second drop in inflation in as many months is a much-needed sign of progress. With inflation now at its lowest since mid-2021, consumers may feel like it’s the time for celebration, but we mustn’t get ahead of ourselves.
“The reality is that the economic climate is a long way from where it needs to be. Millions of people continue to struggle with household bills and credit repayments, worsened by a further slowing in wage growth. Any drop is good news, but we mustn’t lose our perspective on how bad things have been.
Mr Mielczarek continued: ““The 2 percent inflation target is inching closer, so it might not be long before the Bank of England cuts interest rates. So, now is the time for people to squeeze every penny out of the higher rates offered on their savings before they, too, start to diminish.”
In a report, the International Monetary Fund (IMF) predicted UK inflation will plunge to 2.5 percent this year, before the rate comes down further to reach the Bank of England’s 2 percent target in 2025.
Growth is set to improve to 1.5 percent in 2025, where the UK’s position sits among the top three best performers in the G7, the IMF.
This will be driven by inflation easing and household incomes recovering after a prolonged cost-of-living squeeze.
A Treasury spokesperson said: “Today’s report shows we are winning the battle against high inflation, with the IMF forecasting that it will fall much faster than previously expected.
“The forecast for growth in the medium term is optimistic, but like all our peers, the UK’s growth in the short term has been impacted by higher interest rates, with Germany, France and Italy all experiencing larger downgrades than the UK.
“With inflation falling, wages rising, and the economy turning a corner, we have been able to lower taxes for 29 million people, as part of our plan to reward work and grow the economy.”
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