Commenting on the Office of National Statistics Consumer Price Index for March 2026, Adam Deasy, Economist at PwC UK, says:
“February saw price jumps in clothing and furniture balance out against drops in transport, alcohol and tobacco to leave headline CPI inflation unchanged at 3.0%. A few weeks ago, this would have represented a steady reading, and another step along the path back to target. Now, we are facing an energy-shock-shaped bump in the road.
“The inflation impact of the conflict in the Middle East remains highly uncertain. Much will depend not just on its scale and duration, but on how much businesses can pass higher costs on to consumers. With demand soft and the labour market weakening, that may prove difficult. Any government support measures will also shape the outcome. The direction of travel is clear; the scale is not.
“The outlook for policy rates is equally uncertain. Markets are pricing in hikes, while economists generally expect rates to stay on hold, or even fall later in the year. The Bank of England is in a tricky spot, having to make judgements not only on the outlook for global geopolitics, but also on the extent to which higher energy prices will trigger a broader resurgence in inflation pressures. For now, like the rest of us, they are waiting for clearer signals.
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