Easing inflation adds to expectations of further Bank of England rate cuts
The UK’s annual inflation rate eased to 2.6% in March 2025 – marking a slight decline from February’s figure of 2.8%, according to new data from the Office for National Statistics (ONS).
On a monthly basis, consumer prices climbed by 0.3% during March, lower than the 0.6% increase recorded in the same month last year.
Core inflation — which strips out volatile items such as energy, food, alcohol, and tobacco — stood at 3.4% in the 12 months to March. That figure is down marginally from 3.5% in February.
“Inflation eased again in March, driven by variety of factors including falling fuel prices and unchanged food costs compared with the price rises we saw this time last year,” said Grant Fitzner, ONS chief economist. “The only significant offset came from the price of clothes, which rose strongly this month, following the unusual decrease in February.”
Consumer Price Index (CPI) rose by 2.6% in the 12 months to March 2025, down from 2.8% in February 2025.
— Office for National Statistics (ONS) (@ONS) April 16, 2025
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“Worries about the UK and the global economy in response to wider international events has provided a generally downbeat outlook for many consumers,” said Nathan Emerson, chief executive of trade body Propertymark. “However, today’s news will hopefully provide much welcome relief to many people considering taking advantage of the traditionally busy spring and summer months to purchase their next home.
“The overall question remains as to how much of an impact this drop in inflation will influence the Bank of England’s decision to potentially cut interest rates. If any decision to cut the base rate happens within the forthcoming months, this should hopefully lead to a variety of more competitive mortgage deals hitting the market and potentially inspire further market activity at a time when the economy urgently needs growth to help balance the country’s overall financial prospects.”
According to Paul Noble, chief executive of Chetwood Bank, today’s inflation figures suggest a fragile but promising momentum – a second month of stability that “hints we may be turning a corner, though not yet out of the woods.”
“For many, this will feel less like a breakthrough and more like a cautious exhale, especially given the many troubling factors surrounding the economy,” he said. “The Spring Statement outlined a careful balance between support and sustainability – and today’s figures should give the Chancellor a little more breathing room.
“For now, the Bank of England may feel more confident in its long walk to rate cuts, though it will remain watchful of any external shocks. Lenders and financial institutions have a duty to offer smart, flexible options that help customers navigate an uncertain landscape with confidence.”
For Richard Pike, chief sales and marketing officer at mortgage servicing provider Phoebus, “this surprise fall in inflation is a welcome development for the economy and the property market alike.”
“This unexpected dip could strengthen the case for the Bank of England to bring forward a base rate cut – a move that would be warmly welcomed across the housing market,” he said. “Lower interest rates would help alleviate affordability pressures, unlock greater borrowing potential and support increased mortgage activity as we move into what’s traditionally a busy season for home moves.”
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