The United Kingdom’s Office for National Statistics (ONS) is set to release March inflation data on Wednesday at 06:00 GMT, with economists broadly expecting a temporary dip in the headline Consumer Price Index (CPI). Much of that easing is attributed to base effects from last year’s energy price spike dropping out of the annual calculation, aided by a recent reduction in the government’s energy price cap. Forecasts see headline CPI potentially falling to around 1.9%–2.1%, briefly back near the Bank of England’s 2% target for the first time in nearly three years.
However, the respite is fragile. Core inflation, which strips out volatile food and energy, is expected to remain sticky, with services inflation staying elevated due to robust wage growth in sectors like hospitality and professional services. Additionally, wholesale energy costs have surged since early 2025 amid geopolitical tensions, and analysts warn that the April CPI report could show a sharp re‑acceleration, putting upward pressure on households and businesses once again.
For the Bank of England, the mixed picture complicates the path for interest rates. A headline drop might normally support a rate cut, but the Monetary Policy Committee is likely to underscore that sustained evidence of cooling domestic price pressures is needed before any easing. Markets have already pushed back expectations for a first rate reduction, and the central bank may keep borrowing costs higher for longer if inflation proves more stubborn than the temporary headline suggests.
