UK consumer price inflation eased in March, largely due to falling fuel and recreational costs, according to data released by the Office for National Statistics (ONS) on Wednesday.

The Consumer Price Index (CPI) rose 2.6% in the year to March, down from 2.8% in February and below the market forecast of 2.7%, as cited by FXStreet.

Month-on-month, prices increased by 0.3% in March, compared to a 0.4% rise in February.

The broader inflation measure, CPIH – which includes owner occupiers' housing costs – also slowed, dropping to 3.4% in March from 3.7% the previous month.

Key drivers of the annual inflation drop included declines in the transport, housing and household services, and recreation and culture sectors. Fuel prices fell 5.3% year-on-year, with both petrol and diesel dropping by 1.6 pence per litre compared to February.

Recreation and culture inflation dropped to 2.4%, the lowest since October 2021. Meanwhile, inflation for restaurants and hotels eased to 3.0%, the weakest rate since July 2021. Food and non-alcoholic beverages inflation also slowed slightly to 3.0%, down from 3.3%.

Core CPI, which excludes volatile items like energy, food, alcohol, and tobacco, dipped to 3.4% from 3.5%. Core CPIH also edged down to 4.2% from 4.4%.

Owner occupiers’ housing costs rose 7.2% in the year to March, easing from 7.5% in February – marking the second straight monthly slowdown after over a year of increases.

Despite the broader cooling trend, services inflation remained relatively high at 5.4%, though down from 5.7% in February. Photo by J Taylor, Wikimedia commons.