Prices in the UK rose by 2.6% in the 12 months to March, less than in the previous month but still above the Bank of England's target. The Bank moves interest rates up and down to try to keep inflation at 2%, and has cut three times since August 2024. It has warned that it expects inflation to rise again in 2025. LIVE: Reaction as UK inflation falls ahead of Rachel Reeves' Spring Statement Inflation is the increase in the price of something over time. For example, if a bottle of milk costs £1 but is £1.05 a year later, then annual milk inflation is 5%. The prices of hundreds of everyday items, including food and fuel, are tracked by the Office for National Statistics (ONS). This virtual "basket of goods" is regularly updated to reflect shopping trends, withvirtual reality headsets and yoga matsadded in 2025, and local newspaper adverts removed. The ONS monitors price changes over the previous 12 months to calculate inflation. The main inflation measure is called theConsumer Prices Index (CPI),external, and the latest figure is published every month. CPIwas 2.6% in the year to March 2025, down from 2.8% in the 12 months to February. It was a bigger drop than analysts had expected, which the ONS said was driven by afall in petrol prices. Inflation has fallen significantly since hitting 11.1% in October 2022, which was the highest rate for 40 years. However, that doesn't mean prices are falling - just that they are rising less quickly. Inflation soared in 2022 because oil and gas were in greater demand after the Covid pandemic, and energy prices surged again when Russia invaded Ukraine. It then remained well above the 2% target partly because of higher food prices. When inflation was well above its 2% target, the Bank of England increased interest rates to 5.25%, a 16-year high. The idea is that if you make borrowing more expensive, people have less money to spend. People may also be encouraged to save more. In turn, this reduces demand for goods and slows price rises. But it is a balancing act - increasing borrowing costs risks harming the economy. For example, homeowners face higher mortgage repayments, which can outweigh better savings deals. Businesses also borrow less, making them less likely to create jobs. Some may cut staff and reduce investment. The Bank of England cut rates to 5% in August 2024, to 4.75% in Novemberand again to 4.5% in February. It then held rates in March. Announcing that decision, Bank of England governor Andrew Baileywarned about global economic uncertaintybut said that he still believed interest rates were on a "gradually declining path". The Bank expects inflation to spike at 3.7% between July and September 2025 due to higher energy prices, water bills and bus fares. It then thinks inflation will drop back towards the 2% target towards the end of 2027, having previously predicted this would happen earlier in the year. The Bank also considersother measures,external, such as "core inflation" when deciding whether and how to change rates. Core inflation doesn't include food or energy prices because they tend to be very volatile, so can be a better indication of longer term trends. This was 3.4% in January, down slightly from 3.5% in February. Whenrates were held at 4.5% in March, the Bank was concerned about the possible impacts of increases to the amount of National Insurance paid by employers and the minimum wage, both of which took effect at the start of April. There are also growing fears that US tariffs could spark a full-blown international trade war, push up prices and fuel inflation around the world - including in the UK. Will UK interest rate cut make my mortgage cheaper? How Trump's tariffs might affect you and your money Thelatest official figures,externalshow that regular pay in Great Britaingrew by more than inflation between December and February. Average annual growth in pay (excluding bonuses) during the three-month period was 5.9%. After taking inflation into account, wages grew by 3% between December and February. Private sector earnings increased by more than public sector pay. Five tips when asking for a pay rise How to get a job: Six expert tips for finding work Who are the millions of Britons not working? The US and EU countries have also been trying to limit price increases. The inflation rate for countries using the euro was 2.2% in March 2025, down from 2.3% in February. In June 2024, the European Central Bank (ECB)cut its main interest rate from an all-time high of 4% to 3.75%,the first fall in five years. It has since cut rates a further five times,taking its key rate to 2.5%. Inflation in the US fell to 2.4% in March, which was down from 2.8% the previous month but still above the US central bank's 2% target. After a string of cuts in the latter part of 2024, at its March meetingthe US Federal Reserve left its key interest rate unchangedin a range of 4.25% to 4.5%. The Fed also cut its growth forecast as it warned thatPresident Donald Trump's new trade tariffs were "clearly" driving up prices.
Why are prices rising in the UK?
TruthLens AI Suggested Headline:
"UK Inflation Rate at 2.6% in March 2025 Amid Economic Adjustments"
Bbc News
7.9
TruthLens AI Summary
In March 2025, the inflation rate in the UK rose to 2.6% over the previous year, a decrease from 2.8% in February. This drop, which was larger than analysts anticipated, was largely attributed to a decline in petrol prices. The Bank of England aims to maintain inflation at a target of 2% by adjusting interest rates, having cut rates three times since August 2024. Despite the recent decrease, inflation remains above the target, and the Bank has cautioned that it expects inflation to rise again in 2025 due to anticipated increases in energy prices, water bills, and public transport costs. The Consumer Prices Index (CPI) serves as the primary measure of inflation, which tracks a range of goods and services, including food and fuel, through a regularly updated 'basket of goods' monitored by the Office for National Statistics (ONS). Although inflation has significantly decreased from a high of 11.1% in October 2022, this does not indicate falling prices; rather, it signifies a slower rate of increase in costs for consumers.
The Bank of England's strategy to control inflation involves manipulating interest rates, which can influence consumer spending and saving behaviors. When interest rates were raised to 5.25%, it aimed to curb inflation by making borrowing more expensive. However, this approach carries risks, including potential economic harm from higher mortgage repayments and reduced business investment. The Bank has since lowered rates to 4.5% as of March 2025, acknowledging global economic uncertainties while projecting a gradual decline in interest rates. Concurrently, the UK labor market showed positive signs, with wage growth outpacing inflation, leading to a real increase in purchasing power for workers. The UK is not alone in facing inflationary pressures; other regions, including the Eurozone and the US, also reported similar trends, prompting central banks to adopt various monetary policies to manage rising prices in their respective economies.
TruthLens AI Analysis
The news article highlights the recent increase in prices in the UK, providing a detailed overview of the current inflation rates and the measures taken by the Bank of England to manage this economic issue. It reflects on the factors contributing to inflation, including external events like the Ukraine conflict and rising energy prices. By discussing these elements, the article seeks to inform readers about the economic climate while hinting at potential future trends.
Economic Context and Implications
The article notes that inflation in the UK was recorded at 2.6% in March 2025, a decrease from the previous month but still above the Bank of England's target of 2%. This indicates a level of economic concern, as inflation directly affects consumers' purchasing power. The Bank of England's adjustments in interest rates aim to curb inflation and stabilize the economy. The article mentions that inflation peaked at 11.1% in October 2022, showing a significant decline but suggesting persistent economic challenges.
Public Perception and Reactions
The article may aim to shape public perception regarding economic management and inflation. By presenting data on falling inflation rates, it suggests a positive trend while emphasizing that prices are still rising, albeit at a slower rate. This could lead readers to feel cautiously optimistic about the economic situation, potentially fostering trust in government and financial institutions.
Potential Omissions and Hidden Agendas
There may be underlying issues not fully addressed in the article, such as the long-term impact of rising food prices and the socio-economic divide that inflation exacerbates. The article focuses on inflation numbers without delving into the qualitative aspects of how these price changes affect different demographics, which could indicate an attempt to simplify a complex issue or divert attention from broader economic inequities.
Manipulative Aspects and Trustworthiness
While the information provided is factual regarding inflation rates and economic policies, the framing may lead to a perception that the situation is improving more than it is. The mention of a "basket of goods" being updated could mask the reality of changing consumption patterns, suggesting that the article may have a degree of manipulative intent. Overall, the article presents a generally accurate depiction of current economic conditions, but the implications and the portrayal of optimism deserve scrutiny.
Societal and Political Impact
The coverage of inflation and the Bank of England's response could influence public sentiment towards economic policies, potentially affecting political discourse. Voters may respond to how well they perceive governmental efforts to control inflation, impacting future elections and policy decisions.
Target Audience
This news piece is likely aimed at a broad audience concerned with economic issues, including consumers, investors, and policymakers. By addressing inflation, it resonates with anyone affected by rising prices, especially those in lower-income brackets who feel the impact of inflation acutely.
Market Influence
In the financial markets, news about inflation can significantly impact investor sentiment and stock prices. Sectors sensitive to consumer spending, such as retail and food, may react to the perceived stability or volatility in inflation rates. Companies that rely heavily on energy costs could also experience fluctuations based on these economic signals.
Global Relevance
The issues raised in this article have global implications, especially in the context of ongoing geopolitical tensions and supply chain challenges post-COVID-19. Inflation trends in the UK could reflect similar patterns in other economies, making this article relevant to a broader audience beyond the UK.
Use of AI in Article Composition
It's possible that AI tools were employed to assist in drafting or analyzing data presented in the article. Automated systems could have generated statistical insights or formatted the article for readability, though the human oversight is likely essential for contextual understanding and nuanced interpretation. In conclusion, while the article provides valuable insights into current inflation trends, readers should remain cautious about the underlying complexities that may not be fully addressed. The framing of the information could lead to a perception that the economic situation is improving more than it truly is, warranting a critical evaluation of the content.