UK Shop Inflation Hits Two-Year Low, Fueling Rate Cut Expectations

Shop inflation in the UK has dropped to 1.3% in March, the lowest since December 2021, prompting speculation of imminent interest rate cuts by the Bank of England.

Shop inflation fell to 1.3% in March, the lowest rate since December 2021, signaling a significant easing in the cost of living crisis.
Food inflation also saw a notable decrease, dropping to 3.7% in March from a high of 15.7% in April 2023.
The Bank of England is expected to begin cutting interest rates as early as May or June, with traders anticipating a reduction to 4.25% over the next 12 months.
Retailers have intensified competition, offering deals and promotions to attract consumer spending amidst a slowdown.
The decrease in shop inflation is attributed to falling food costs, competitive pricing among retailers, and a reduction in energy prices due to the energy price cap adjustment.