IoD press release Ease in inflationary pressures paves way for more rate cuts
Commenting on today’s data from the Office for National Statistics, that showed the annual rate of CPI inflation weakening to 2.6% in March 2025 from 2.8% in February, Anna Leach, Chief Economist at the Institute of Directors, said:
“Inflation has come in a little lower than expected again in March, with services inflation easing to 4.7% while goods inflation dropped to 0.6%. Downward pressures on inflation broadened this month to seven categories, with recreation and culture subtracting most from the annual rate. Inflation is expected to lift sharply next month with the rise in the Ofgem price cap.
“Tariff turbulence injects new uncertainty into the outlook for inflation and interest rates in the UK. Tariffs set on goods coming into the US can affect the UK via a number of channels: lower global growth (creating less demand for UK exports and lowering commodity prices), financial market volatility, exchange rate volatility, supply chain effects and trade diversion into UK. Many of these effects put downward pressure on inflation – indeed gas prices are now some 40% below their February peak while Brent Crude is 7% down over the same period. We may see more interest rate cuts than previously expected this year which would provide some welcome support to the economy.”
