UK inflation dips slightly but remains above 10% as food prices hit 45-year high

UK inflation eased slightly last month on the back of lower petrol prices but it still remains above 10%, new figures show.

The Office for National Statistics (ONS) said the consumer price index (CPI) measure dipped to 10.1% in March, down from 10.4% the previous month. Despite the slight fall the figure is still higher than economists had predicted, as it was forecast to be around 9.8% for the month.

The high CPI rate continues to keep pressure on the Bank of England in regard to interest rates, with inflation still heavily above the 2% target rate.

Household budgets are continuing to come under pressure as food and drinks prices soared further last month, with ONS revealing costs have increased by 19.1% - the sharpest jump since August 1977.

Prices of food staples including bread, cereals and fruit went up, while the impact of vegetable shortages also continued to weigh on inflation. Figures show this was partly offset by lower fuel costs, with petrol and diesel costs down 5.9% against the same month last year after prices had spiked following Russia’s invasion of Ukraine.

ONS chief economist Grant Fitzner said: “Inflation eased slightly in March, but remains at a high level. The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year. Clothing, furniture and household goods prices increased, but more slowly than a year ago.”

Responding to the latest figures, Chancellor Jeremy Hunt insisted the UK is still on track to cut inflation and will “halve” it this year. He said: “These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses.

“We are on track to do this – with the OBR (Office for Budget Responsibility) forecasting we will halve inflation this year – and we’ll continue supporting people with cost-of-living support worth an average of £3,300 per household over this year and last, funded through windfall taxes on energy profits.”

Meanwhile, chief economist at the Institute of Directors Kitty Ussher said that UK businesses remain “extremely concerned” by the inflation rate and want to see it brought under control.

She added: “While it is a relief that the headline rate of inflation is now pointing downwards again, following the surprise rise last month, the Bank of England’s job is not yet done.”