The Consumer Price Index (CPI) inflation rate has declined to 3.2% in March, down from February’s 3.4%, a change that economists find underwhelming.
Forecasts by Reuters and the Bank of England had anticipated a decrease in the inflation rate to 3.1%, suggesting that the Bank might need more time before reducing interest rates than was initially anticipated.
Derrick Dunne, YOU Asset Management CEO, remarked, “Inflation is inching closer to the Bank of England’s goal of 2%, but the slowdown is marginal, raising worries for those looking forward to an interest rate reduction.
“The ongoing above-target inflation, coupled with robust wage hikes, indicate that the Bank of England may not yet be observing the clear signs it needs to start slashing rates. With the Gross Domestic Product (GDP) also picking up, expectations for a forthcoming decrease in rates are fading steadily.
“Plainly put, the Monetary Policy Committee (MPC) doesn’t see convincing indications to commence rate reductions just yet. This news isn’t favourable for those with mortgages or those considering buying a home, and it won’t inspire confidence in the markets, either.”
The core inflation rate, which excludes the volatile energy and food sectors, decreased to 4.2% in March from 4.5% the previous month, which was slightly higher than the 4.1% predicted by analysts.
Paresh Raja, CEO of Market Financial Solutions, commented, “The forecast is optimistic, yet the broader economic situation continues to be tough. The inflation data released today will likely boost confidence in the property market as the economic outlook appears to get better.”
