Inflation hits 3.3% – industry reaction

UK inflation remained increased to 3.3% in March, according to the latest data from the Office for National Statistics (ONS), up from 3.0% in the 12 months to February.

On a monthly basis, CPI rose by 0.7% in March 2026, versus a rise of 0.3% in March 2025. Motor fuels made the largest upward contribution to the monthly change in both CPIH and CPI annual rates; clothing made the largest, partially offsetting, downward contribution.

Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.1% in the 12 months to March 2026, down from 3.2% in the 12 months to February; the CPI goods annual rate rose from 1.6% to 2.1%, while the CPI services annual rate rose from 4.3% to 4.5%.

Commenting on inflation figures for March, ONS Chief Economist Grant Fitzner said “Inflation climbed in March, largely due to increased fuel prices, which saw their largest increase for over three years. Airfares were another upward driver this month, alongside rising food prices.

“The only significant offset came from clothing costs, where prices rose by less than this time last year. The monthly cost of both raw materials for businesses and goods leaving factories rose substantially, driven by higher crude oil and petrol prices.”

Anna Leach, Chief Economist at the Institute of Directors, said “Upward pressure on inflation from the conflict in Iran is now starting to emerge in prices. Transport inflation made the biggest contribution to overall consumer inflation, driven by petrol and diesel prices, which rose by 4.9% on the year. Meanwhile, within producer input prices, crude oil prices rose by 58.8% between February and March. As inflation has come in in line with revised expectations, and given yesterday’s labour market data which showed a fall in vacancies and further downward progress in wage growth, interest rates should hold at next week’s MPC meeting. But there remains tremendous uncertainty over the outlook for energy supply and prices.”

“April has seen renewed pressure on business costs, with rises in the minimum wage, business rates, national grid charges, energy and financing costs. Against this backdrop, the need for the UK’s uncompetitive energy costs to be addressed is acute. Steps to reduce the influence that gas prices have on electricity prices are welcome, but yesterday’s announcements will not lead to a break between the two and so are unlikely to provide businesses with significant relief. Decisive action is needed to completely decouple electricity and gas, while in the short-term committing to using revenue from the increased EPL to reduce the non-commodity costs which constitute the majority of business energy bills.”

Mike Randall, CEO at Simply Asset Finance said “An uptick in headline inflation suggests geopolitical tensions are beginning to feed through to costs and supply chains – but will hopefully be short-lived, and not the start of a more persistent trend”

“This news could delay future rate cuts, putting pressure on borrowing costs and tightening margins for SMEs. But with the right access to finance – there is still room for businesses to invest and grow. While global pressures will continue to demand the Government’s attention, it must not lose sight of those driving the UK economy forward – and give SMEs the backing they need to keep moving ahead.”

Emma Wall, Chief Investment Strategist at Hargreaves Lansdown said “UK inflation increased to 3.3% as the impact of the Middle East conflict flowed through to fuel prices. This increased from 3% the previous month and was in line with analyst expectations.  While the increase in prices will be felt keenly at the petrol pump, it is highly unlikely a single inflation print will be enough to sway policy makers into moving Bank of England base rate next week.

“Inflation is likely to remain elevated in April too, and markets are now pricing in one rate rise later this year, but our house view is that rates are held through the conflict – returning to the expected rate cutting cycle later than forecast just a couple of months ago, but on path to neutral next year.”

John Phillips, CEO of Just Mortgages and Spicerhaart, said “As predicted, inflation has gone up in March but perhaps, not as high as many would have expected. There’s no doubt that this is still very much in our future with the conflict still ongoing and both oil and commodity prices feeling the effect. Right now, the illusive 2% target feels like a pipedream with inflation set to travel further in the wrong direction. What this means to the bank rate is yet to be seen. Any plans for a rate cutting party next week should be firmly on ice. If anything, we’ll just be grateful to avoid any hikes.

“While we’re certainly feeling it at the petrol pumps, the conflict in Iran hasn’t seemed to slow down movers and buyers – neither has the Easter half-term disruption. We are still posting really positive numbers for buyer registrations, valuation requests and for mortgage appointments. While remortgages continue to drive activity, we are still seeing really encouraging purchase numbers. It comes down to controlling what we can control and for advisers, that means being present and visible, staying in close contact with customers and lenders, and delivering that five-star service for those looking to navigate the market.”