Consumer price inflation, UK: March 2026 + Reactions
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Consumer price inflation, UK: March 2026 Chancellor of the
Exchequer, Rachel Reeves, said: “This is not our war, but it is
pushing up bills for families and businesses. That's why it's my
number one priority to keep costs down. "Our economic plan is the
right one and has put us in a stronger position to support families
in the face of this new crisis. “We've taken £117 off energy bills,
frozen rail fares and protected motorists with the fuel duty
freeze. We're...Request free trial
Consumer price inflation, UK: March 2026 Chancellor of the Exchequer, Rachel Reeves, said: “This is not our war, but it is pushing up bills for families and businesses. That's why it's my number one priority to keep costs down. "Our economic plan is the right one and has put us in a stronger position to support families in the face of this new crisis. “We've taken £117 off energy bills, frozen rail fares and protected motorists with the fuel duty freeze. We're acting to protect people from unfair price rises if they occur to bring down food prices at the till, and are boosting long-term energy security — building a stronger, more secure economy.” Conservative Party Sir Mel Stride MP, Shadow Chancellor of the Exchequer, said: “The conflict in the Middle East is increasing inflation – but Labour's choices have made everything worse and made our economy vulnerable. “Tax hikes, reckless spending and disastrous energy policies have left Britain exposed. We already had the highest inflation in the G7 when this crisis began. We need a different approach: cutting the benefits bill, lowering taxes and drilling in the North Sea. Get Britain Working Again.” ENDS Notes to Editors: The conflict in the Middle East is increasing the cost of living:
At the same time, Labour are shutting down the North Sea and introducing a Fuel Tax:
Labour's economic mismanagement left Britain exposed to external shocks:
British Chambers of Commerce Responding to the latest inflation data, published this morning by the Office for National Statistics, David Bharier, Head of Research at the British Chambers of Commerce said: “Today's 3.3% inflation figure for March is an early signal that the Iran conflict is feeding through into official data and impacting the UK economy. “Transport is the biggest contributor, driven by the rapid rise in fuel costs, though food and household energy inflation are yet to be captured. “But the inflationary path also reflects cost pressures that were building long before the latest shock. BCC data in Q1 showed 73% of businesses were already citing labour costs and 54% energy costs as inflation drivers. “With spiralling energy costs and sustained supply chain disruption, the March inflation figure is more likely to be a floor than a peak. “The Bank of England faces a stagflationary dilemma. Cutting rates risks embedding inflation, but holding or raising them could wreak major damage on an already fragile economy. “The government's extension of support for energy-intensive firms is a necessary step. But it must move with similar urgency on the other major cost pressures bearing down on business, particularly business rates and employer National Insurance. “Over the longer term, the UK will only build resilience by unlocking investment, boosting exports, and harnessing the productivity potential of AI.” CBI Martin Sartorius, Lead Economist, CBI, said: “Inflation ticked up in March, as the energy shock from the Iran conflict began to feed through to the UK economy. We expect the conflict to put upward pressure on households' fuel, energy, and food bills in the coming months. While risks are tilted to the upside, at this stage it seems unlikely that inflation will rise to the same extent as during the previous energy shock in 2022. "We continue to expect that the Bank of England's Monetary Policy Committee will keep interest rates unchanged at its next meeting, as it waits to see how the inflationary impact of the Iran conflict develops. Persistently weak domestic activity and a looser labour market imply that rate hikes are relatively less likely in the near term, but they could still be a possibility if the conflict escalates significantly.” IoD Commenting on today's data from the Office for National Statistics that showed the annual rate of CPI inflation rising to 3.3% in March 2026, Anna Leach, Chief Economist at the Institute of Directors, said: “Upward pressure on inflation from the conflict in Iran is now starting to emerge in prices. Transport inflation made the biggest contribution to overall consumer inflation, driven by petrol and diesel prices, which rose by 4.9% on the year. Meanwhile, within producer input prices, crude oil prices rose by 58.8% between February and March. As inflation has come in in line with revised expectations, and given yesterday's labour market data which showed a fall in vacancies and further downward progress in wage growth, interest rates should hold at next week's MPC meeting. But there remains tremendous uncertainty over the outlook for energy supply and prices.” “April has seen renewed pressure on business costs, with rises in the minimum wage, business rates, national grid charges, energy and financing costs. Against this backdrop, the need for the UK's uncompetitive energy costs to be addressed is acute. Steps to reduce the influence that gas prices have on electricity prices are welcome, but yesterday's announcements will not lead to a break between the two and so are unlikely to provide businesses with significant relief. Decisive action is needed to completely decouple electricity and gas, while in the short-term committing to using revenue from the increased EPL to reduce the non-commodity costs which constitute the majority of business energy bills.” Resolution Foundation CPI inflation jumped to 3.3 per cent in March, up from 3.0 per cent in February – in line with market expectations – in the first sign of war-driven price rises feeding through to British households, the Resolution Foundation said today (Wednesday). The rise in March was largely driven by petrol prices, which have increased sharply since the outbreak of the war. The average price of a litre of unleaded petrol increased from £1.32 in February to £1.40 in March, a rise of 6.5 per cent. The average price of a litre of unleaded petrol is currently £1.58 – a further rise of around 12 per cent compared with the March average meaning higher petrol prices will provide further upward impetus to inflation next month. While this will be felt immediately in the pockets of motorists, these increases represent only the beginning of the likely inflationary impact of the conflict. The two biggest items in most household budgets – food and energy – are yet to feel the full effect of a global surge in energy costs. Food prices typically take around 12 months to adjust to shifts in global commodity costs, while domestic energy bills will only move once Ofgem resets the price cap in July, and again in October. Alongside this inflation release, the Foundation has released new analysis of the policy response urging the Government prepare tightly targeted and time-limited energy discounts for vulnerable low-income households. The analysis also suggest that the weak state of the labour market should give the Bank of England room to be patient in raising interest and that the Chancellor should stay within her fiscal rules when designing the government's response to the rise in the cost of living. James Smith, Chief Economist at the Resolution Foundation, said: “Today's inflation figures show the first impact of the war on British household budgets – but further rises in food and energy bills are still to come. “The timing matters: petrol tracks global prices very promptly, but food price rises can take a year to fully feed through, and energy bills will not rise decisively until the colder months. That means inflation is likely to remain elevated through the rest of the year, albeit at much lower rates than seen after Russia's invasion of Ukraine. “The outlook remains highly uncertain, and there is a lot the Government can do to support the most vulnerable households. They should move quickly to prepare targeted and temporary support on energy bills, while a weaker labour market may offer the Bank of England leeway to avoid the major rate hikes that followed the last price shock.”
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