Energy shock may feed into CPI from April data release
UK inflation was 3% in the year to February 2026, unchanged from January, according to data published on Wednesday by the Office for National Statistics (ONS).
The reading matched market expectations for the Consumer Prices Index (CPI). Core inflation, which excludes energy and food, rose to 3.2% from 3.1% a month earlier.
The Consumer Prices Index (CPI) rose by 3.0% in the year to February 2026, unchanged from the 12 months to January 2026 as various price movements offset each other.
— Office for National Statistics (ONS) (@ONS) March 25, 2026
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“After last month’s slowdown, annual inflation was unchanged,” said Grant Fitzner, chief economist at the Office for National Statistics.
“The largest upwards driver was the price of clothing, which rose this month but fell a year ago. This was offset by falls in petrol costs, with prices collected before the start of the conflict in the Middle East and subsequent rise in crude oil prices.
“A fall in the cost of alcoholic drinks due to promotional activity, compared with a rise last year, was also a downward driver, while little change in food prices, again compared with a small rise this time last year, added further downward pressure.”
The figures arrive as the Bank of England’s near-term inflation projections face renewed pressure from higher energy costs linked to the Iran war. The central bank had previously expected inflation to return to its 2% target by April 2026, a path that had left room for rate reductions. That view has been challenged by the jump in oil and gas prices and warnings from officials that inflation is likely to rise in the short term. The Bank kept its base rate at 3.75% in last week’s monetary policy meeting.
Rate expectations have also shifted sharply in recent weeks. Markets are now pricing four interest rate increases later this year, reversing earlier assumptions that cuts were more likely.
Any impact from higher fuel costs is expected to be visible in the March inflation release, due on April 22. The Ofgem energy price cap reset in July is also expected to provide a clearer indication of the inflation effect from the energy price surge.
“Although inflation has remained steady since last month, it is important to acknowledge geopolitical tensions moving forward, and the effect such pressures may have on many households over the coming months,” said Nathan Emerson, chief executive of industry body Propertymark. “Today’s news should help bring a measured sense of consistency in terms of the ‘here and now’ regarding how the economy is currently coping.
“However, when looking at the wider global picture, there are many factors which remain changeable and have the potential to highly influence the economic outlook moving forwards. Following recent news that government borrowing costs were higher than anticipated, there is significant work needed to encourage and support growth in the housing market over the coming months. We have moved from a sense of optimism to a feeling of justified concern in a short amount of time.
“While caution from the Bank of England will be necessary to help further slow inflation, it is hoped that we will eventually see more favourable mortgage rates appear across the lending spectrum when realistic.”
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