After a long stretch of economic unease, UK inflation has continued its downward trajectory, with the Consumer Prices Index (CPI) falling to 2.6% in the year to March, according to the latest inflation figures from the Office for National Statistics (ONS). This marks the second consecutive monthly decline and comes in lower than market expectations — a welcome development for households and policymakers alike.
According to the ONS, the largest downward pressures on inflation came from recreation and culture, alongside lower motor fuel prices. These helped offset persistent strength in services inflation, which remains elevated compared to pre-pandemic norms.
But while the headline figure may offer a moment of relief, financial experts are urging advisers to keep a close eye on what’s ahead. April brought a wave of price hikes — from energy bills to council tax — which won’t be captured in the latest data. Meanwhile, global uncertainties, including the potential for further trade disruption driven by US tariffs, continue to cast a long shadow over the inflation outlook.
Markets have begun pricing in a rate cut from the Bank of England as early as May, and many believe monetary easing will follow throughout the year. Yet concerns remain about how far and how fast inflation may rise again, and whether rate-setters will act pre-emptively or wait for further clarity.
For advisers, the latest data represents both a checkpoint and a conversation starter — a timely moment to help clients review their financial plans, assess the resilience of their portfolios, and prepare for a macroeconomic environment that’s still anything but settled.
Here’s what leading commentators across investment firms and wealth managers are saying about the inflation numbers — and what they mean for you and your clients:
Jonny Black, chief commercial and strategy officer at Aberdeen Adviser, welcomed the news but sounded a note of caution:
“Although unexpected, a second consecutive fall in inflation brings some welcome relief – but it’s no reason to become complacent, especially for households still juggling higher bills and everyday costs.
“The Bank of England still forecasts inflation could peak at 3.7% towards the end of the year, but with global headwinds gathering – from rising energy prices to the ripple effects of US-led tariffs – that may prove to be a low estimate.
“This is a wake-up call to reassess financial plans, consider inflation-proof strategies and speak to a financial adviser who can help make sure your money is working as hard as it possibly can.”
Danni Hewson, AJ Bell head of financial analysis, urged advisers to look beyond the headline figure:
“A bigger than expected drop in headline inflation should be celebrated, especially considering what households have had to deal with over the past few years.
“But this month’s figures almost seem redundant considering all those price rises that set in at the start of April, which are expected to push inflation higher than any of us would like. From water bills to energy costs, all those things we need jumped up at the start of what has been cheerfully labelled ‘Awful April’.
“It’s an unenviable task made even more difficult by the battering from what some have now dubbed ‘Storm Donald’ as the US president’s messy tariff policy wreaks havoc with the global economy.
“At 2.6%, inflation is ahead of the Bank’s 2% target but it’s likely to be sufficiently low to give rate setters the green light to keep cutting the base rate, with markets currently pricing in an 85% chance of a quarter-point cut at the next meeting.”
Nathaniel Casey, investment strategist at Evelyn Partners, pointed to persistent underlying pressures and sticky services inflation:
“Despite the lower-than-expected annual reading for March, the UK continues to face stickier inflationary pressures compared with other advanced economies.
“Services CPI inflation remains elevated at 4.7% year-over-year, roughly twice the rate it was in December 2019, before the pandemic… While the BoE is yet to deliver an interest rate cut this year, we expect the growth risks will outweigh the inflation concerns and the bank will soon cautiously resume their cutting cycle.”
Lindsay James, investment strategist at Quilter, emphasised the uncertain global backdrop and its influence on UK price pressures:
“Much like financial markets, the outlook for inflation remains very uncertain… There are specific inflationary pressures for the UK, with the new rates of national insurance now in place on employers and the likely upward impact this will have on prices.
“Energy prices have dropped quite significantly since the start of the year… this could offset some of the inflationary pressures the UK has specifically.
“The market is currently pricing in three [rate cuts] by the end of the year… Should inflation play ball and stay in this 2%-3% range, then we may just see those rate cuts be delivered.”
Scott Gardner, investment strategist at Nutmeg, highlighted the impact of fuel prices and flagged future risks:
“UK inflation fell marginally during March as motorists reaped the rewards of falling petrol prices at the pump… Even after back-to-back monthly falls in the headline figure there is some uncertainty ahead.
“Several price rises during April, including a sizeable hike to the energy price cap, will likely feed through into the next set of data… Inflation will likely rise further above the Bank of England’s target of two percent over the coming months, but it is now a question of by how much and the timing of the peak.”
