Inflation Falls Again

Published / Last Updated on 19/04/2018

Consumer Spending SlowdownInflation Falls to 2.5 Per Cent.

The Office for National Statistics has released inflation figures for March 2018 with headline CPI inflation falling to 2.5% pa and the old measure of inflation, RPI, falling back 3.3% pa.

Inflation + Housing Costs CPIH

The Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate fell from 2.5% pa to 2.3% pa.  This is known as CPIH and a benchmark we believe that now includes owner occupier housing costs as mortgage interest rates are low.  This is not CPI but CPIH.

Consumer Prices Inflation CPI

The Consumer Prices Index (CPI) fell from 2.7% pa to 2.5% pa.  This is a key Bank of England (BoE) number and relieves pressure on the Bank of England to increase interest rates.

Retails Prices Index (RPI) – the old measure of inflation

RPI was also down from 3.6% pa to 3.3% pa.  Although this is no longer an official 'National Statistic', it certainly relieves pressure on the Bank of England to increase interest rates and strengthen the £ as imported food and goods price increases have slowed a little.


The Office for National Statistics suggests that the decrease was due to prices falling for clothing and footwear, particularly women's clothing.  The £pound had already strengthened earlier this week on the back of expected interest rate rises next month.  That said, with presure reducing with these inflation falls, the Bank of England may now not put interest rates up.  This weakened the £ on Wednesday and Thursday, with FTSE 100 susequently rising.  If interest rates do increase next month it will hit stock markets.