Author Faarea Masud of BBC Business has reported that falling petrol prices in the UK have resulted in a decrease in inflation, dropping to 2.6% from 2.8% in February. Although this decline is seen as temporary, experts anticipate a spike in inflation from April as bills and business costs begin to rise. Chief economist at the Office for National Statistics (ONS), Grant Fitzner, noted that the price of clothes rose significantly this month, providing a slight offset to the overall decrease in inflation.
According to official data, the average price of petrol has fallen by 1.6p per litre between February and March, reaching 137.5p per litre. Additionally, a drop in prices in the recreation and culture sector, particularly in toys, games, and hobbies, has contributed to the decrease in inflation. The pace of price rises has slowed down, despite ongoing increases in prices, with wages continuing to outpace inflation. Data released by the ONS shows an average wage rise of 5.9%.
Analyst Michael Saunders from Oxford Economics predicts that inflation figures for April may reach 3% due to rising gas, electricity, and water prices. He also mentions the potential impact of Trump’s trade wars on exports and investments in the UK, which could weaken the economy and lead to rising unemployment. This trade dispute has also affected global growth and oil prices, eventually resulting in lower petrol prices in the UK.
Sonja Skelton, the owner of West Special Fasteners, shares her concerns about rising costs for her business, particularly in staffing and energy expenses. As her firm deals with non-standard fasteners made with stainless steel and exotic metals, the increasing cost of materials has forced her to consider raising prices. Despite efforts to improve efficiency, Skelton acknowledges the challenges of operating in the engineering sector, where global conflicts can have a significant impact on the business.
In light of decreasing inflation, there is speculation about a possible interest rate cut by the Bank of England. With vacancies at a four-year low and economic pressures from tariffs, the Bank might consider a rate cut. However, strong wage growth poses a dilemma for the Bank, as it typically discourages rate cuts. Analysts forecast a return to the 2% inflation target by 2026, offering some relief to the government and economy
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