Annual CPI inflation falls to 10.1 per cent

Annual consumer price inflation decreased from 10.4 per cent in February to 10.1 per cent in March 2023, according to the National Institute of Economic and Social Research (NIESR), published on 19 April 2023¹. The fall was largely driven by price decreases in transport, specifically motor fuels, which were partially offset by price increases in food and non-alcoholic beverages, as well as recreation and culture¹. NIESR said this marks the seventh consecutive month of double-digit CPI inflation and the twentieth consecutive month that the rate has been above the Bank of England's target¹.

Food inflation rose to an annual rate of 19.1 per cent in March from 18.0 per cent in January, the highest rate for this category observed in over 45 years¹. NIESR said this is concerning since there is no government support to help households, especially lower income households, who spend a greater part of their incomes on food, offset this cost¹.

Underlying measures moved in different directions. NIESR's measure of underlying inflation, which excludes 5 per cent of the highest and lowest price changes, rose to a new series high of 9.9 per cent in March from 9.7 per cent in February¹. At the same time, the ONS's measure of core inflation, CPI excluding food, energy, alcohol and tobacco, remained flat at 6.2 per cent¹. NIESR said these figures suggest the UK has yet to see a meaningful turning point in underlying inflationary pressure¹.

NIESR's measure of underlying inflation rose in each of the 12 UK regions, and regional trimmed-mean inflation dispersion rose for a second consecutive month¹. The North of England experienced a trimmed-mean inflation rate of 10.70 per cent in March, while Northern Ireland experienced 8.89 per cent¹.

The CPI and CPIH measures are the headline gauges of UK consumer prices, and the latest UK inflation figures set out when they are published.

Why it matters for households

The headline rate fell, but at 10.1 per cent prices were still rising faster than at any point in the previous four decades, and the twentieth consecutive month above the Bank of England's target means the squeeze on household budgets had run for well over a year¹. Food inflation at 19.1 per cent affects everyone who buys groceries, and NIESR noted that lower income households, who spend a greater part of their incomes on food, are hit disproportionately, with no government support in place to offset that cost¹. The gap between the North of England at 10.70 per cent and Northern Ireland at 8.89 per cent shows the rate of price increases varied by region¹. Core inflation flat at 6.2 per cent and NIESR's trimmed-mean measure at a series high of 9.9 per cent indicate that underlying pressure had not eased, even as the headline figure dropped¹.

What happens next

NIESR said inflationary pressures remain persistent, possibly warranting a need for the Monetary Policy Committee to raise rates further next month¹. No further dates are given in the source.