Pressure on Bank to cut interest rates as inflation drops to 2.6%

UK inflation dropped to 2.6% in March, increasing the pressure on Bank of England policymakers to cut interest rates next month as Donald Trump's tariff wars cast an uncertain outlook.

- Phillip Inman

Prices growth was weak before an expected rise in April as households begin to pay higher council tax and utility bills.

Last month's reading is below City forecasts of a fall to 2.7%. It comes after the consumer prices index fell in February to 2.8%, down from 3% in January.

The Office for National Statistics (ONS) said falling fuel prices and slowing increases in the cost of a night out had driven inflation lower, although this was offset by price rises for clothing and footwear. The price of food was also a factor in dragging down price growth after it was flat in March, compared with rising prices in the same month last year.

The average price of petrol fell by 1.6p a litre between February and March 2025 to stand at 137.5p a litre, down from 144.8p a litre in March 2024, the ONS said.