Inflation in the United Kingdom continued to ease in March, marking the second month in a row of slowing price increases. The decline was largely driven by falling fuel prices, which helped push the overall rate of inflation lower, according to official figures released on Wednesday.
This moderation in inflation is seen as a potentially significant development for monetary policy, with growing speculation that the Bank of England could move to cut interest rates as early as next month. The central bank has kept rates high in recent months to combat inflation, but with consumer price growth showing signs of sustained slowing, a shift in policy may be on the horizon.
Much of the easing came from the transport sector, particularly at the petrol pump, where fuel costs declined compared to the same period last year. Other categories, such as food and household goods, showed signs of stabilizing, though prices remain elevated compared to pre-pandemic levels.
The Bank of England has been closely watching inflation data to assess when it might be appropriate to begin reducing interest rates, which are currently at their highest level in over a decade. A rate cut could provide relief to borrowers and stimulate economic activity, especially as households continue to feel the pinch from previous rate hikes.
Although the central bank has not yet made a formal decision, the latest data adds to the growing expectation that a cut could come as early as May—provided inflation continues on its current downward path and economic conditions remain steady.
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