UK inflation slowed last month but remained in double figures as household budgets continue to come under pressure.

The Office for National Statistics (ONS) revealed that Consumer Prices Index (CPI) inflation fell to 10.1% in March from 10.4% in February.

Economists had forecast it would be 9.8%.

The figure shows a slight improvement in cost of living crisis as fuel prices fell back below levels seen a year ago when Russia’s war in Ukraine prompted a spike in oil costs.

The high level of inflation continues to keep pressure on the Bank of England regarding interest rates, with inflation still heavily above the 2% target rate.

The ONS revealed food prices increased by 19.1% year-on-year, the sharpest jump since August 1977.

Bread, cereals and fruit prices increased, while the impact of vegetable shortages also continued to weigh on inflation.

February’s data had already shown an additional hit from the salad shortage that month though prices are tipped to fall sharply as the UK enters growing season.

There were some hopes that a deceleration in inflation would allow the Bank of England to pause its action to battle inflation through interest rate rises.

It has raised Bank rate at 11 consecutive meetings since December 2021 in a bid to keep a lid on price pressures in the economy.

While policymakers can do nothing about energy – the Bank can look to take demand out of the economy by raising borrowing costs.

Chancellor Jeremy Hunt said: ‘These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses.

‘We are on track to do this – with the OBR (Office for Budget Responsibility) forecasting we will halve inflation this year – and we’ll continue supporting people with cost-of-living support worth an average of £3,300 per household over this year and last, funded through windfall taxes on energy profits.’

Kitty Ussher, chief economist at the Institute of Directors, said: ‘Business remains extremely concerned by the rate of inflation and wants to see it under control.

‘While it is a relief that the headline rate of inflation is now pointing downwards again, following the surprise rise last month, the Bank of England’s job is not yet done.’

But Rachel Reeves, Labour’s shadow chancellor, said: ‘The reality is that under the Tories our economy is weaker, prices are out of control and never have people paid so much to get so little in return.’

ONS chief economist Grant Fitzner said: ‘Inflation eased slightly in March, but remains at a high level.

‘The main drivers of the decline were motor fuel prices and heating oil costs, both of which fell after sharp rises at the same time last year.

‘Clothing, furniture and household goods prices increased, but more slowly than a year ago.

‘However, these were partially offset by the cost of food, which is still climbing steeply, with bread and cereal price inflation at a record high.’

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