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| UK inflation falls as price of petrol drops | UK inflation falls as price of petrol drops |
| (about 1 hour later) | |
| Falling petrol prices drove UK inflation down by more than expected in the year to March. | Falling petrol prices drove UK inflation down by more than expected in the year to March. |
| Inflation was 2.6%, down from a rate of 2.8% in February, according to official data. | Inflation was 2.6%, down from a rate of 2.8% in February, according to official data. |
| But the fall may only be temporary as analysts say it's expected to spike from April as rising bills and higher business costs take hold. | But the fall may only be temporary as analysts say it's expected to spike from April as rising bills and higher business costs take hold. |
| "The only significant offset came from the price of clothes which rose strongly this month," said Grant Fitzner, chief economist at the Office for National Statistics (ONS). | |
| The inflation decrease was also driven by a drop in recreation and culture prices, with toys, games, and hobbies falling particularly sharply. | |
| Wages continue to outpace inflation with salary raises for public sector workers growing more than those in the private sector. | Wages continue to outpace inflation with salary raises for public sector workers growing more than those in the private sector. |
| The average rise in wages was 5.9%, data released by the ONS on Tuesday showed. | The average rise in wages was 5.9%, data released by the ONS on Tuesday showed. |
| 'It's getting higher and higher' | |
| Sonja says the biggest cost for her business is staffing - and that's about to get higher with minimum wage increases. | |
| The recent increase in National Insurance has cost her over £60,000. | |
| "And it's getting higher and higher," she says, but she adds she's happy to pay as she says it will help to improve the UK's infrastructure. | |
| Her firm, West Special Fasteners, makes nuts and bolts, and has been doing since 1999. | |
| The firm has over 65 employees and supplies offshore defence and specialist construction firms with non-standard fasteners, made with stainless steel and exotic metals. | |
| "We're trying to be a little bit more efficient, so we're trying to improve all our processes, because that can help claw some of that money back." | |
| But, she adds, if she isn't able to absorb extra costs, the prices of her products will have to go up. | |
| "So there's a specialist material we call that's called Hastelloy C-276. I'd probably say around five years ago, that might have been, say, £30 per kilo. | |
| "We're now looking at around about £50 per kilo. So, as you can tell, it's a massive, massive increase". | |
| As her firm is a high energy user, the rising cost of energy has also "really impacted" her. | |
| On top of that, she says that working in engineering, "you always have ups and downs, because it really depends what's happening all over the world, and conflicts can have a knock-on effect on what we do". | |
| Interest rate cut | |
| As inflation comes down, it could put pressure on the Bank of England to cut its key interest rate, currently 4.5%. | |
| Vacancies at their lowest point in four years and economic pressure predicted from Donald Trump's tariffs may also encourage the Bank to cut when it meets next month. | |
| But the Bank faces a dilemma, as wage growth remains strong and this would normally discourage a cut in rates. | |
| Experts and analysts predict inflation to fall to near its 2% target by 2026. | |
| The drop in inflation will be welcome news to the government, said Lindsay James, investment strategist at Quilter. | |
| "With the jobs market weakening somewhat, and very real and present tariff threats still in play, any downward pressure on inflation will be hailed," she said. | |
| She added the forecast for inflation "remains very uncertain" because of a "volatile" global economy, and rising National Insurance which she said will raise prices from April onwards. | |
| Chancellor Rachel Reeves said the drop was "encouraging" but that "there is more to be done. | |
| "I know many families are still struggling with the cost of living and this is an anxious time because of a changing world," she said. | |
| However, shadow chancellor Mel Stride says Reeves' "reckless union payouts, tax hikes and borrowing binge is driving up the cost of living". | |
| He said inflation remains above the official target of 2% due to her choices. |