Capital Economy, Business and Finance
Three years after Putin delivered a seismic upward shock to the cost of living in most advanced economies by invading Ukraine, inflation is back under control – at least in the UK, at least for now.
Prices went up slower than expected at an annualised rate of 2.6 per cent last month from 2.8 in February, with more striking slowdowns in food (3 per cent from 3.3), services (4.7 per cent from 5) and average rents (7.7 from 8.1).
Thomasz Wieladek of T Rowe Price tells the FT inflation is down for once “for the right reasons”, meaning lower prices for inputs such as energy rather than falling demand.
And with inflation close to the target rate of 2 per cent, the Bank of England could make as many as three quarter-point cuts to base rates this year.
But there are at least two caveats.
Oil prices are down not because the world has got used to managing without Russian energy but because of fears US tariffs could presage a global slowdown.
UK inflation, meanwhile, is expected to tick up again next month because of rising household utility bills.
