FX.co ★ UK Inflation Rate Slows More than Anticipated

The United Kingdom witnessed a deceleration in its annual inflation rate, which eased to 2.6% in March 2025, down from 2.8% recorded in February. This figure also fell short of the anticipated 2.7%. Significant downward pressures were observed in the recreation and culture sectors, where inflation declined to 2.4% from a previous 3.4%, driven primarily by reductions in prices for games, toys, hobbies (-4.2%), and data processing equipment (-5.1%). The transport sector also contributed to this deceleration, with inflation dropping to 1.2% from 1.8%, largely attributed to a 5.3% decrease in motor fuel prices. Prices for restaurants and hotels displayed a slower rate of increase at 3%, marking the lowest since July 2021, compared to the prior 3.4%, largely due to a decrease in accommodation service costs (-0.6%). Additionally, smaller increases were noted in housing and utilities (1.8% down from 1.9%), as well as in food and non-alcoholic beverages (rising by 3% compared to a previous 3.3%). On the contrary, clothing and footwear experienced the most pronounced upward influence, with prices increasing by 1.1% from a prior decline of -0.6%, reflecting the usual pattern of price hikes associated with the arrival of spring fashion. Month-over-month, the Consumer Price Index (CPI) saw a modest rise of 0.3%, slightly under both the preceding month’s growth and market predictions of 0.4%. Meanwhile, annual core inflation decreased marginally to 3.4% from 3.5%.