Has a stubborn inflation rate killed off a cut in interest rates?

The consumer price index has fallen less than the Bank of England had expected – but it’s still at a two-and-a-half-year low, says James Moore, and shrinking energy prices could make next month’s figure more likely to ease interest rates

A big drop in inflation is still on the cards for April – less so, interest rates (PA Wire)

The inflation genie has given warning that it isn’t quite ready to return to its bottle, sharpening the Bank of England’s interest rate dilemma.

The rate at which prices rose fell only slightly in the year to March. The Office for National Statistics’ consumer prices index declined to 3.2 per cent from 3.4 per cent, higher than the 3.1 per cent expected by economists contributing to the regular Reuters poll.

Inflation now sits at a two-and-half-year low and is far removed from the 41-year high of 11.1 per cent, recorded in October 2022. But the worse-than-expected number still feeds into an increasingly mixed picture facing the rate-setting Monetary Policy Committee (MPC) when it meets early next month.