The United Kingdom still has the highest consumer price inflation (CPI) rate in Western Europe. The rate might have dropped from 10.4% in February to 10.1% in March, which was lower than expected, but it was still significant, according to the official data released on Wednesday.
While economists expected the annual CPI rate to fall to 9.8% in March, it remained high and continued to reduce the spending power of workers whose pay is not increasing at the same rate. Last month, only Britain in the region posted a double-digit number, and the price of food and non-alcoholic beverages increased by 19.1% in annual terms in March, the largest such increase since August 1977, according to the Office for National Statistics.
The Bank of England had previously stated that it anticipated a significant decrease in inflation in the second quarter of the year, and in February, it had predicted an inflation rate of 9.2% for March.
Although inflation is expected to fall naturally as the high energy prices from last year are no longer included in the annual comparison, the Bank of England is uncertain about the rate of decline. Recent indicators have been mixed, with stronger-than-anticipated wage growth but signs of cooling cost and selling price pressures according to business surveys. On Tuesday, financial markets showed an 80% likelihood of the Bank of England increasing interest rates next month.
