UK Inflation Continues to Cool in March 2025

Inflation in the UK eased further in March 2025, continuing the disinflationary trend seen in recent months.

According to data from the Office for National Statistics, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.4% in the 12 months to March, down from 3.7% in February. The standard Consumer Prices Index (CPI) also slowed, falling to 2.6% from 2.8%.

On a monthly basis, both indices increased by 0.3%, which is half the rate recorded in March 2024. This points to a softer pace of price growth across the economy.

Key Factors Behind the Decline

• The largest downward pressure came from lower prices in recreation and culture, particularly in games and data processing equipment.
• Motor fuel costs also fell, contributing to the overall slowdown.
• In the CPIH measure, housing and household services exerted additional downward pressure.
• Clothing was the main category pushing inflation upward, acting as a partial offset to the broader decline.

Core and Sector-Based Inflation Trends

Core inflation, which excludes more volatile components such as food and energy, also showed signs of easing:

• Core CPIH fell to 4.2% from 4.4%
• Core CPI dipped to 3.4% from 3.5%

Goods and services inflation also moderated:

• CPIH goods inflation slowed to 0.6%
• CPI goods inflation eased to 0.6%
• CPIH services inflation dropped to 5.4%
• CPI services inflation declined to 4.7%

Outlook

The continued decline in both headline and core inflation points to a broad-based cooling of price pressures in the UK economy. While clothing prices remain a source of upward momentum, falling energy-related costs and subdued price growth in key consumer sectors are helping to ease inflation. These developments may offer more room for monetary policy flexibility in the months ahead.