Economists at the University of Salford have given their reaction to news that inflation has dropped to 2.6%.
Matthew Allen, Lecturer in Economics and macroeconomic expert at the University of Salford, said: “The drop in UK inflation to 2.6% is a welcome sign on the surface, largely driven by falling fuel prices. However, this headline figure masks the broader economic pressures that continue to affect households and businesses across the country.
“While inflation is technically easing, the reality is that the cost of living remains stubbornly high. Council tax, water bills and energy prices have all risen by over 5%, meaning that many families will still feel financial pressure despite the overall decline in inflation. The Office for National Statistics (ONS) has projected that inflation is unlikely to fall below the 2% target until 2027, this suggests that the squeeze on consumer and business budgets will persist for the foreseeable future.
“Looking ahead, the Autumn Budget from Rachel Reeves is expected to include a series of tax rises. These could further erode disposable income and place additional strain on both households and businesses. Internationally, the looming impact of Donald Trump’s proposed tariffs adds another layer of uncertainty. While the UK secured a reciprocal tariff rate of 10%, half the level imposed on EU nations, there’s still ambiguity about how this will translate to prices on the ground, particularly for imported goods and supply chains.
“In short, while the inflation figure is moving in the right direction, it’s far too early to say the UK is out of the woods. Structural cost increases and looming policy changes mean that the financial challenges for consumers and businesses are far from over.”
Dr Maria Paola Rana, Lecturer in Economics at the University of Salford, added: “Good news on the morning before the long Easter bank holiday weekend. According to the latest figures published by the Office for National Statistics (ONS), inflation has decreased.
“The Consumer Price Index (CPI), in fact, rose by 2.6% in the 12 months to March 2025, down from 2.8% in the 12 months to February. So yes, prices are still increasing, but at a slower rate and at a rate closer to the 2% target. This is why an interest rate cut by the Bank of England next May is likely, but not certain, given the current uncertainty in the global economic outlook caused by Trump’s trade policies.
“The largest decrease in prices has been in recreation and culture, transport, restaurants and hotels, while prices of clothing and footwear, as well as furniture and household goods, have increased.
“The good news however is not expected to last long, given the increase in labour costs due to the rise in minimum wages and national insurance are expected to be reflected in next month’s figures. The Chancellor herself has admitted that 'there is more to be done.'”