Katie Williams
The rate of UK inflation fell in March, but is expected to jump sharply in next month’s data. The Consumer Prices Index fell to 2.6% on an annual basis, compared to 2.8% in February.
Economists had been forecasting inflation to fall to 2.7%, but the CPI beat expectations by slowing by 10 basis points more.
Last month’s fall was thanks to a year-on-year downward price pressure from the recreation and culture sectors, as well as falling motor fuel prices.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
These downward contributions were, however, partially offset by an upward contribution from the price of clothing increasing year-on-year.
CPI data is published once a month, with the next report (covering April) due on Wednesday, 21 May. Nine more reports will be published covering 2025.
Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Like an inattentive driver in rush hour traffic, inflation has hit the brakes again, falling to 2.6% in March. But the rough ride isn’t over.Once the price rises of Awful April kick in, we can expect it to accelerate sharply again.
“The Bank of England has forecast that it’ll hit around 3.75% in the third quarter of 2025. But with Trump’s tariffs driving the future of the global economy, we can’t be completely certain what direction we’re heading in and how fast we’re likely to go.”
We share a list of this year’s CPI dates before delving further into the inflation outlook for 2025.
Next UK inflation figures
In the UK, the main measure of inflation is the Consumer Prices Index. The Office for National Statistics (ONS) releases this once a month. Each reading covers the previous month.
Release dates for 2025
- 21 May (covering April)
- 18 June (covering May)
- 16 July (covering June)
- 20 August (covering July)
- 17 September (covering August)
- 22 October (covering September)
- 19 November (covering October)
- 17 December (covering November)
- 21 January 2026 (covering December)
What time is CPI released in the UK?
The ONS releases the latest CPI data at 7.00am once a month. You can access the data by going onto the ONS website and clicking on its release calendar. All published and upcoming releases are listed there. The report will be titled, “Consumer price inflation, UK”, followed by the month and year in question.
MoneyWeek regularly reports on the latest inflation data and what it means for you.
What is CPI and how is it calculated?
As introduced previously, CPI is the main measure of inflation used in the UK. It tells you how much the cost of living is going up or down.
It is calculated using a typical basket of household goods and services – from eggs, flour and milk to hotel costs, restaurants and air fryers – and tracking how their prices change.
The CPI basket of goods is readjusted once a year to reflect current trends in consumption. For example, VR headsets and yoga mats were added to the basket in 2025, while oven-ready gammon joints and DVD rentals were removed.
The Bank of England keeps a close eye on CPI when setting interest rates. If inflation is too high, the Bank raises interest rates to slow consumer spending and cool the economy. This works in bringing prices down because households have less money to spend when mortgage rates are high and debts are more expensive to repay.
Meanwhile, if inflation is too low, the Bank may reduce interest rates so consumers have more disposable income to spend. Due to the laws of supply and demand, this pushes prices back up.
Where is inflation heading next?
The path ahead is unlikely to be completely straight. As the latest CPI release only covers March, data is yet to be published that shows the possible inflationary pressures of “Awful April’s” household bill increases.
Energy, water, council tax, and broadband costs increased at the start of April with the Ofgem price cap increasing by 6.4%, and water bills soaring by as much as 47% in some parts of England.
These price hikes have the potential to place upwards inflationary pressures on the economy as consumers start to fork out more for these essentials.
Furthermore, the start of April marked the beginning of the new tax year, when a host of new business costs came into force.
The rise in employers’ National Insurance contributions has now been implemented, meaning firms across the country will see a sharp increase in their costs. Meanwhile, the 6.7% increase to the National Living Wage will leave employers more stretched.
As costs have risen, some businesses have indicated they are looking to pass these on to consumers by raising their prices, which could therefore increase the rate of inflation.
Across the pond, US president Donald Trump has continued to add to global economic unrest.
His baffling tariff regime has sent global stock markets into free fall after he announced a set of “reciprocal” tariffs, with different rates for different countries, which he later suspended for 90 days.
But, despite “reciprocal” tariffs being suspended, a blanket 10% tariff is still imposed on all imports. This, alongside a 25% tariff on imported steel, aluminium, and cars, will start to have significant effects on the UK’s own economy, though it may be some time until we fully understand them.
If Trump’s tariff regime holds, there is a threat that inflationary pressures could be created if other countries respond with their own tariffs and ignite a global trade war, hiking prices across the world.
Looking further to the future, the Bank of England has reaffirmed that it expects UK inflation to possibly rise to as high as 3.75% in the third quarter of 2025, although it thinks that it will slow back to the 2% target at the start of 2026.
The central bank is also alive to the global economic uncertainty, saying in the minutes of its latest MPC meeting: "Since the MPC’s February meeting, there had been a further increase in geopolitical and global trade policy uncertainty, and it was likely that this elevated uncertainty would persist."
As a result, "the Committee judged that the consequent risks around the near-term outlook for activity in a number of advanced economies, including the United Kingdom, remained to the downside”.
-
Watch out for fake Steven Bartlett video – you could lose thousandsScammers are trying to tap into the Trump tariffs chaos, but knowing what to look out for could save you thousands of pounds, says Kalpana Fitzpatrick
-
Can Donald Trump fire Jay Powell – and what do his threats mean for investors?Donald Trump has been vocal in his criticism of Jerome "Jay" Powell, chairman of the Federal Reserve. What do his threats to fire him mean for markets and investors?
