Inflation tracker

A visualisation of the latest UK Consumer Price Index (CPI) data with expert commentary from key PwC leaders.

UK Inflation Tracker

Using the UK Office of National Statistics data for the Consumer Price Index, we have visualised some of the most common categories in order to understand the market trends in inflation. The data is updated monthly as new data is released.

Last updated: 17 April 2024

Economics

Headline inflation took another small step on the path back to target as it declined from 3.4% to 3.2% in March. Most of this can be explained by lower food inflation, which is now falling at a rapid pace. Food inflation is now at 4%, down from 19% last year. However, this was partially offset by rising motor fuels prices, as oil prices have picked up in response to concerns over supplies and mounting geopolitical risks.

We expect that next month’s inflation release will mark an important milestone as headline inflation potentially falls below the Bank of England’s 2% target for the first time in nearly three years. Once again, energy prices are likely to do most of the heavy lifting, with household energy bills having been cut by 12% on April 1st and our modelling indicating another large reduction could come on July 1st.

With inflation falling back relatively rapidly, the Bank of England has a difficult balancing act to manage. If inflation returns to target next month, then pressure will mount on the Bank of England to loosen monetary policy in order to get the economy growing again. However, the Bank is likely to want more conclusive evidence that we have achieved a sustainable return to target before they pivot to rate cuts.

Jake Finney, economist at PwC

Consumer markets

After February’s bigger-than-expected fall in headline inflation to 3.4%, the disinflation trend was always expected to slow at the end of Q1. March’s CPI figure has come in at 3.2%, thanks to lower rises for food, clothing and household goods.

The continued fall in grocery and other retail price inflation had already been widely trailed in industry data released earlier in the month. Prices for food and non-alcoholic beverages rose by 4.0% in the year to March 2024, down from 5.0% in February. The March figure is the lowest annual rate since November 2021. The rate has eased for the 12th consecutive month from a recent high of 19.2% in March 2023, the highest annual rate seen for over 45 years.

Meanwhile, widespread discounting by general retailers to clear excess stock after a subdued start to 2024 contributed to lower prices. Prices of furniture and household goods actually fell, in part reflecting cautious spending by consumers on big ticket items. We also saw more promotional activities on women’s clothing and footwear.

Core inflation - which excludes food and utilities - and services inflation in particular, are however proving much stickier, with operators having little choice but to pass on wage and other cost increases.

The question for April is whether expected inflationary rises in services categories like communications, leisure and insurance will be sufficiently offset by slower utility and grocery price inflation to meet the Bank of England’s 2% target, as most economists are still expecting.

The psychological impact of that alone, combined with rises in National Living Wage, state pension and benefits, plus a second cut in National Insurance, might provide weary consumers with the fillip they need to start spending again, after a decidedly slow start to 2024.

Lisa Hooker, Leader of Industry for Consumer Markets