London Daily

Focus on the big picture.
Wednesday, Oct 21, 2026

Inflation eases but still remains above 10% as food costs at 45-year high

Inflation eases but still remains above 10% as food costs at 45-year high

The figures covering March again prove more stubborn than economists had expected, making the chance of a further Bank of England interest rate rise more likely.

The rate of inflation has eased slightly but still remains above 10%, according to official figures showing food and drink costs at a 45-year high.

The Office for National Statistics (ONS) said the consumer prices index (CPI) measure slowed to 10.1% in March from 10.4% the previous month.

Economists had largely expected a figure of 9.8%.

The data represents a slight improvement in the energy-driven cost of living crisis as fuel prices fell back to levels seen a year ago when Russia's war in Ukraine prompted a spike in oil costs.

However, upwards pressure remained from household gas and electricity and food, including essentials such as bread, milk and eggs.

Food and non-alcoholic drink inflation was measured at 19.1% by the ONS - the highest level since August 1977.

High commodity and production costs are mostly to blame.

Other factors behind the spike were highlighted in February's inflation data when the salad shortage struck supermarkets.

A crumb of comfort is that prices for goods such as tomatoes and cucumbers are tipped to fall sharply as the UK growing season gathers pace.

ONS chief economist Grant Fitzner said of the easing in overall inflation in March: "The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year.

"Clothing, furniture and household goods prices increased, but more slowly than a year ago.

"However, these were partially offset by the cost of food, which is still climbing steeply, with bread and cereal price inflation at a record high.

"The overall costs facing business have been largely stable since last summer, although prices remain high."


The latest figures were released against a backdrop of hopes that a deceleration in inflation would allow the Bank of England to pause its action to battle inflation through interest rate rises.

It has raised Bank rates at 11 consecutive meetings since December 2021 in a bid to keep a lid on price pressures in the economy.

While policymakers can do nothing about things like energy - the main driver of the inflation crisis - the Bank can look to take demand out of the economy by raising borrowing costs.

It will have been encouraged by the easing in the headline rate of inflation.

But a separate measure closely watched by the Bank that strips out volatile price elements, known as core inflation, remained static at 6.2%.

Employment data released on Tuesday also showed that wages continued to creep upwards, albeit at levels well below CPI.

The Bank has previously expressed worries that wage rises seeking to combat the hit to household budgets from inflation, which have come into sharp focus during the winter strikes across the economy, risk stoking inflation ahead.

Financial market data suggested the chance of a 0.25 percentage point rise in Bank Rate at the next meeting, due next month, had risen from 80% to 95%.


Susannah Streeter, head of money and markets at Hargreaves Lansdown, commented: "'The heat has been turned down on the bubbling cauldron of prices, but inflation is still scalding and interest rates look set to be pushed up again to try and cool it down rapidly.

"Instead of retreating below double digits, CPI is staying stubbornly high, causing more pain for companies and consumers."

Chancellor Jeremy Hunt said: "These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses.

"We are on track to do this - with the OBR (Office for Budget Responsibility) forecasting we will halve inflation this year - and we'll continue supporting people with cost-of-living support worth an average of £3,300 per household over this year and last, funded through windfall taxes on energy profits."

Labour shadow chancellor, Rachel Reeves, said: "The question for families remains as real as ever - when will they feel better off under this Conservative government?

"And, why when the cost of living continues to bite, is the government refusing to freeze council tax this year, paid for by a proper windfall tax on oil and gas giants?"

Newsletter

Related Articles

0:00
0:00
Close
Housebuilding Across Scotland Plummets to Eleven-Year Low Despite Government Pledges to Tackle National Housing Emergency
Greggs Announces Factory Closures Across Northern England and Scotland Affecting Seven Hundred Forty Jobs
United Kingdom and Singapore Conclude Eleventh Financial Dialogue in Singapore to Deepen Cooperation on Digital Finance and Capital Markets
Energy Security and Net Zero Committee Urges Government to Shift Policy Costs to Gas Bills and Tap Windfall Profits to Lower Consumer Prices
British Broadcasting Corporation Announces Major Cost-Cutting Overhaul to Close Linear Broadcast Services for Television Channels BBC Three and BBC Scotland Alongside Digital Radio Station BBC Radio Four Extra
London Capital Markets Face Renewed Scrutiny After High-Profile Offerings Underperform Post-Listing
Green Party Wins Historic First Westminster Parliamentary By-Election in Gorton and Denton
Environment Secretary Emma Reynolds Unveils Sweeping Regulatory Overhaul for English Water Industry
United Kingdom Health Security Agency Confirms Thirty-Four Cases in Kent Meningitis Outbreak
Ministry of Defence Prepares Heat Pump Subsidy Cuts to Fund Urgent Military Modernization
British and European Union Officials Schedule Long-Awaited Bilateral Leaders Summit for November Twentieth
Bank of England Governor Andrew Bailey Urges Strict Fiscal Credibility to Protect British Bond Markets
United Kingdom Inflation Rises to Three Point One Percent Driven by Escalating Fuel Costs
Profit Warnings Among London-Listed Companies Reach Two-Year High Amid Global Energy Shocks
Chancellor John Healey Signals Targeted Tax Changes on Banks and London Corporate Offices Ahead of Budget
British Government Reallocates Twenty-Five Per Cent of International Climate Finance to Global Biodiversity Projects
Initial British Carbon Border Taxes Set to Undercut Parallel European Union Tariffs on Industrial Imports
Whitehall Prepares National Zero-Interest Loan Initiative to Accelerate Domestic Heat Pump and Solar Adoption
European Union Offers British Automakers Access to Hybrid Vehicle Trade Protections Subject to Strict Regulatory Alignment
British Probation Officers Threaten Widespread Industrial Action After Rejecting Five Per Cent Government Pay Offer
Microsoft Abandons Major British Artificial Intelligence Data Centre Citing Severe National Grid Power Constraints
United Kingdom Inflation Accelerates to Three Point Four Per Cent Ahead of Chancellor John Healey's Inaugural Autumn Budget
Surging Cloned Number Plates Severely Complicate Traffic Enforcement and Police Investigations
Mounting Opposition Challenges Planned Rollout of Autonomous Taxis Across London
Influential Think Tank Urges Rejoining European Union to Navigate Geopolitical Crises
Government Review Recommends Slashing Benefits to Fund Youth Employment Initiatives
Senior Minister Shabana Mahmood Seeks New Law Enforcement Pact With European Union
Airbus Executive Warns Britain Risks Losing Crucial Role in European Space Industry
Exorbitant Electricity Costs Push British Steelmakers to Worst Competitive Position in Three Years
British Food and Beverage Exports to European Union Collapse by Over a Third Since Brexit
Up to Twenty English Maternity Units Face Impending Closure Due to Safety and Staffing Crises
Government Declares Severe Drought Across Southern England Following Record Dry Spell
Corporate Profit Warnings Reach Two-Year High Amid Middle East Conflict and Rising Costs
International Monetary Fund Warns Chancellor John Healey Against Proposed Bank Tax Raid
Northern Ireland Secures Favorable Agricultural Export Agreement with European Union
Scottish Government Approves Major Offshore Floating Wind Farm Near Aberdeenshire
High Speed Two Rail Project Faces Three Billion Pound Cost Escalation on Initial Phase
National Health Service Warns of Winter Capacity Crisis Across English Hospitals
Tata Steel Confirms Two Thousand Job Cuts at Port Talbot to Fund Green Transition
Global Microchip Developer Announces Three Billion Pound Semiconductor Plant in Cambridge
United Kingdom Artificial Intelligence Safety Institute Proposes Mandatory Licensing for Generative Models
United Kingdom Commits Additional Long-Range Weapons and Air Defenses to Ukraine
British Chancellor Overhauls Infrastructure Financing to Bypass Borrowing Constraints
Bank of England Holds Benchmark Interest Rate at Four Point Five Percent
First Minister Rhun ap Iorwerth Confirms Constitutional Discussions Over Welsh Independence During Initial Bilateral Call with Prime Minister
Labour Party Instructs Local Council Groups to Sever Power-Sharing Accords with Green Party Over New Controversial Policy Positions
Institute for Fiscal Studies Warns of Thirty-Five Billion Pound Fiscal Gap Ahead of Chancellor John Healey Upcoming Autumn Budget
House of Lords Backs Landmark Legislative Amendment to Decriminalize Abortion Across England and Wales
United Kingdom Defence Secretary Wes Streeting Travels to Pentagon for High-Level Strategic Talks Amid Escalating Tensions Over Ukraine and United States Policy Shifts
Bank of England and International Monetary Fund Officials Issue Urgent Warnings Regarding Potential Artificial Intelligence Financial Market Shocks
×