UK No Longer An Outlier On Inflation As It Falls Below The US Rate For First Time Since In Two Years

18th April 2024

CPI inflation fell to 3.2 per cent in March - falling below the US inflation rate (CPI for All Urban Consumers) of 3.5 per cent for the first time since March 2022 (but still above the Eurozone rate of 2.4 per cent) – bringing an end to the UK's unwanted status as an outlier on inflation, the Resolution Foundation said on Wednesday in response to the latest ONS data.

The latest fall was less than markets expected, but driven by a welcome fall in food inflation (down to 4 per cent, from 19.1 per cent last year). Petrol prices were the most signification upwards pressure on prices.

Encouragingly, both core and services inflation fell in March (though the latter is 0.2 percentage points above the Bank’s forecast), and a significant fall is due in April as a result of the energy price cap falling, which should take CPI close to its two per cent target.

Simon Pittaway, Senior Economist at the Resolution Foundation, said, "Many economies have struggled through an inflation-driven cost of living crisis over the past two years, but the UK has been an outlier – experiencing a prolonged period double digit price rises. With UK inflation finally falling below the US, its unwanted outlier status is over.

"With a further significant drop due next month, inflation should soon return to target – and the pressure to cut interest rates will grow."