Surprise fall in inflation a “hollow victory”

Overall, yearly inflation decreased by 0.2%, from 2.8% to 2.6% – driven by falls in prices for recreation and culture, motor fuel, and housing and household services. This decline was partially offset by an increase in clothing costs.

While this represents positive news, John Phillips – chief executive of Just Mortgages and Spicerhaart – described it as a "bit of a hollow victory", adding that new tax changes and price hikes will "add fuel to the inflationary fire". He added: "That’s not even considering any potential fallout from a tit-for-tat war which rumbles on."

"What is good news is that a positive reading on inflation is likely to help influence the MPC’s decision next month on interest rates, as will the need to stimulate growth amid the threat of economic uncertainty. With expectations of a cut, we have already seen swap rates react favourably and lenders across the board announce reductions.

"With so much in play and plenty of headwinds – both at home and abroad – it’s hard to predict with any great certainty how long this trend will continue. One of the biggest factors will continue to be the future path of inflation and how this shifts the bank’s expectations on future interest rates."

Hargreaves Lansdown’s head of personal finance Sarah Coles – meanwhile – described the current inflationary period as being like an "inattentive driver in rush hour traffic", adding that the rough ride isn’t over.

She went on to explain: "Once the price rises of Awful April kick in, we can expect it to accelerate sharply again. The Bank of England has forecast that it’ll hit around 3.75% in the third quarter of 2025.

"But with Trump’s tariffs driving the future of the global economy, we can’t be completely certain what direction we’re heading in and how fast we’re likely to go."