Martin Lewis issues UK inflation warning as he breaks down reality of rising costs

Martin Lewis has given his reaction to the inflation rate dropping to its lowest level in over two years.

The headline rate of inflation fell from 3.4 per cent in February to 3.2 per cent in March.

In a post on X Mr Lewis described this drop as “a big improvement from 10.1 percent a year ago”.But Mr Lewis added: “To be clear though this doesn’t mean prices are lower.”On average things still cost 3.2 percent more than a year ago, and something costing £100 two years ago now costs an average £113.60.”

Martin Lewis

The news comes from the Office for National Statistics (ONS), whose chief economist Grant Fitzner said: “Inflation eased slightly in March to its lowest annual rate for two and a half years.

“Once again, food prices were the main reason for the fall, with prices rising by less than we saw a year ago.

“Similarly to last month, we saw a partial offset from rising fuel prices.”

A Treasury spokesperson said: “Today’s report shows we are winning the battle against high inflation, with the IMF forecasting that it will fall much faster than previously expected.

“The forecast for growth in the medium term is optimistic, but like all our peers, the UK’s growth in the short term has been impacted by higher interest rates, with Germany, France and Italy all experiencing larger downgrades than the UK.

“With inflation falling, wages rising, and the economy turning a corner, we have been able to lower taxes for 29 million people, as part of our plan to reward work and grow the economy.”

Stroud Farmers Market

The annual rate of increase in food prices came down from 5 percent to 4 percent. While some products, such as chocolate biscuits, are actually getting cheaper.

The ONS also pointed out that furniture and household goods, such as washing machines, are 0.9 percent cheaper than a year ago.

At the same time, the rate of increase of clothing and footwear eased from 5 percent to 3.9 percent.

Petrol and diesel prices rose in March, which partly offset better news on other goods and services.

Alice Haine, Personal Finance Analyst at Bestinvest by Evelyn Partners, said: “Core CPI inflation, which strips out more volatile items such as food, energy and tobacco, also eased to 4.2 percent in March, raising hopes that the Bank of England may make a move to cut interest rates sooner rather than later.”

But she said: “Easing inflation does not automatically guarantee an imminent interest rate cut.

“While the Bank of England acknowledges that interest rate cuts are the ‘direction of travel’, they say they require consistent evidence that inflationary pressures are in retreat before they can make a move.

“This means borrowing costs could remain higher for longer – not something households starting to get a grip on their finances after the protracted financial squeeze of the past couple of years may want to hear.”