UK inflation has decreased to 2.8%, providing a boost for Rachel Reeves before her spring statement. The Office for National Statistics stated that inflation, measured by the consumer prices index, dropped last month, resuming a downward trajectory. City economists had predicted a modest decline to 2.9%. Grant Fitzner, the ONS chief economist, said that clothing prices played a significant role in the decrease, partially offset by increases in alcoholic drinks. The figures were released just before the chancellor’s address to the Commons, where Reeves is expected to present a gloomy outlook on the economy and public finances. Britain’s economy has neared stagnation with high prices and elevated borrowing costs. Inflation is expected to rise again due to increasing wholesale energy costs and climbing food prices, with the Bank warning of a potential peak of around 3.7% later in the year. Households are also bracing for a council tax and utility bill increase in April, while business leaders warn of potential job cuts and price hikes due to the planned increase in employer national insurance contributions. Suren Thiru suggests that the slowdown is a false dawn, while Paul Dales predicts a drop to 2.5% in March, followed by an increase to above 3% in April due to utility and water bill hikes.

Source: https://www.theguardian.com/business/2025/mar/26/uk-inflation-falls-boost-for-rachel-reeves