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U.K. Inflation Rate Fell To 3.2% In March

Inflation in the United Kingdom (U.K.) declined to 3.2% in March, according to data from the Office for National Statistics.

The March inflation reading was down from 3.4% in February but higher than the 3.1% expected among economists polled by the Reuters new agency.

The higher-than-expected March data has prompted concerns that inflation might be sticky and pushed back the timing for the Bank of England to begin lowering interest rates.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 4.2%, compared with a forecast of 4.1%.

Food prices provided the biggest downward pressure on March inflation while higher gasoline prices pushed it higher.

Services inflation, a key indicator for the British central bank, declined from 6.1% to 6% but was also above the expectations of economists.

Speaking after the latest inflation data was released, Bank of England Governor Andrew Bailey said he saw evidence that higher interest rates are bringing consumer prices lower, falling from a peak of 11.1% in October 2022.

However, markets changed their expectations for rate cuts this year. Futures traders now anticipate a first rate cut of 25 basis points in September or November.

The prime interest rate in the U.K. now stands at 5.25%.