Inflation falls slightly, but food prices are rising at their fastest pace in 45 years | UK News

A customer at the checkout in an Iceland Foods Ltd supermarket. at Watney Market in the Tower Hamlets borough of London, Britain, on Saturday, March 18, 2023. The Office for National Statistics is due to release the latest CPI inflation data for the UK on Wednesday. Photographer: Jose Sarmento Matos/Bloomberg via Getty Images

The cost of living crisis has eased slightly in the latest figures, but groceries are becoming more expensive (Image: Bloomberg via Getty Images)

UK inflation slowed last month but remained in double digits as household budgets continue to come under pressure.

The Office for National Statistics (ONS) said consumer price index (CPI) inflation fell to 10.1% in March from 10.4% in February.

Economists had expected 9.8%.

The chart shows a slight improvement in the cost-of-living crisis as fuel prices fell back below levels seen a year ago when Russia’s war in Ukraine caused oil prices to rise.

High inflation levels continue to keep the Bank of England under pressure on interest rates, with inflation still well above the 2% target rate.

The ONS revealed that food prices rose 19.1% year-on-year, the sharpest rise since August 1977.

Bread, grain and fruit prices rose while the impact of vegetable shortages continued to weigh on inflation.

A customer shops for milk at a Sainsbury's supermarket in east London on February 20, 2023. - UK retail sales made a surprise rebound in January on falling fuel costs and discounts from online and physical stores, official data showed on Friday. At the same time, grocery sales fell 0.5 percent, the ONS said, after large price hikes last year. (Photo by Daniel LEAL/AFP) (Photo by DANIEL LEAL/AFP via Getty Images)

Food prices are rising at the fastest rate in 45 years (Image: AFP)

February data had already shown an additional blow from this month’s lettuce shortages, although prices are likely to fall sharply as the UK enters the growing season.

There was some hope that a slowdown in inflation would allow the Bank of England to pause its anti-inflation policy by raising interest rates.

It has raised interest rates for 11 consecutive meetings since December 2021 to keep price pressures in the economy under control.

While policymakers can’t do anything about energy, the bank can try to take demand out of the economy by raising the cost of borrowing.

Chancellor Jeremy Hunt said: “These numbers confirm exactly why we must continue our efforts to bring inflation down so we can ease the pressure on families and businesses.

“We are on track to do that – with the OBR (Office for Budget Responsibility) forecast that we will halve inflation this year – and we will continue to support people with living expenses worth an average of £3,300 per household above that support year and last year funded by windfall taxes on energy gains.’

Kitty Ussher, Chief Economist at the Institute of Directors, said: “The economy remains extremely concerned about the rate of inflation and wants it to be under control.

“While it is a relief that headline inflation is now pointing downwards after last month’s surprise surge, the Bank of England’s work is not done.”

But Rachel Reeves, Labour’s shadow chancellor, said: “The reality is that under the Tories our economy is weaker, prices are out of control and people have never paid so much to get so little.”

ONS Chief Economist Grant Fitzner said: “Inflation eased slightly in March but remains elevated.

‘The main drivers of the decline were fuel prices and heating oil costs, both of which have fallen after a simultaneous sharp rise over the past year.

“Prices of clothing, furniture and household goods have increased, but at a slower pace than a year ago.

“However, these have been partially offset by food costs, which are still rising sharply, with bread and grain price inflation hitting record highs.”

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Justin Scaccy

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