This morning has brought disappointing news for the UK on the inflation front. We can start with the measure targeted by the Bank of England.
The Consumer Prices Index (CPI) rose by 3.3% in the 12 months to March 2026, up from 3.0% in the 12 months to February.
On a monthly basis, CPI rose by 0.7% in March 2026, compared with a rise of 0.3% in March 2025.
The Bank of England will no doubt point to this as an excuse.
Prices in the transport division rose overall by 4.7% in the 12 months to March 2026, up from 2.4% in the 12 months to February On a monthly basis, prices rose by 2.4% in March 2026, compared with a rise of 0.1% a year ago.
The move was driven by this.
The largest upward effect came from motor fuels. The average price of petrol rose by 8.6 pence per litre between February and March 2026.. The average price stood at 140.2 pence per litre in March 2026. Diesel prices rose by 17.6 pence per litre in March 2026, compared with a fall of 1.6 pence per litre in March 2025. The average price stood at 158.7 pence per litre in March 2026,.
There has been a particular surge in diesel prices which raises a wry smile. For younger readers there was a particular period under Gordon Brown where we were encouraged to get diesel cars. At one point my company car tax was reduced as part of this. Not only has it turned out to be a disaster environmentally it now would leave you with higher fuel costs. Another failure from the ship of state.
Returning to the Bank of England whilst these fuel costs are beyond its control it does have a problem in the way that it has allowed UK inflation to persist meaning we start from a worse place than our peers. If we look across the channel we see a Euro area with inflation at 2.6% on the same measure. Plus only in February it was pretty much on target at 1.9%.
Airfares
Regular readers will know I have been raising this issue for some time and below is a link to when I formally raised it in January last year.
So it was hard not to have a wry smile when I read this earlier today and the emphasis is mine.
Air fares rose by 10.0% between February and March 2026, compared with a fall of 0.3% a year ago. The rise into March 2026 was the largest increase between February and March since 2016, when it was 22.9%.
This sort of thing keeps happening and if you look at my link you will see that I have never received an official reply in spite of my regular updates. That in my opinion is because they do not have an answer and the numbers are out of control. So they are adopting the Ostrich position. There is more detail below.
The upward effect came almost entirely from long haul routes, where the return flights were on the Tuesday immediately after the Easter weekend. All prices were collected before the outbreak of war in the Middle East on 28 February 2026.
There is often an excuse which is usually around European routes so it has changed.
The fundamental problem is that in the real world we are expecting big changes here and our official statisticians have a series that Taylor Swift would describe like this.
Oh, oh, trouble, trouble, trouble
Oh, oh, trouble, trouble, trouble
Food Price Inflation
This is an area that has proved to be very problematic. The reality is that we saw food prices go up but in general they have not come down again even when food commodity prices fell. An example of this comes from a Lidl own brand bar of fruit and nut chocolate. The 200 gram bar rose from £1.05 to £1.85 in the cost of living crisis. Over the past year London cocoa futures have fallen by 60% so did the price fall? No in fact recently it rose to £1.95 so up again.
I realise that is an anecdote rather than a statistic but it is consistent with what other people tell me and this morning I noted this.
On a monthly basis, food and non-alcoholic beverage prices rose by 0.3% in March 2026, but were little changed a year ago…..Food and non-alcoholic beverage prices rose by 3.7% in the 12 months to March 2026, up from 3.3% in the 12 months to February.
As to my chocolate point the fastest category was this one at 1.8% for the month.
sugar, jam, syrups, chocolate and confectionery;
This is a concern when it looks really rather likely that food prices will be pushed even higher by rising fertilizer costs.
Heating Oil
The comments section was well ahead of this development as we were kept in touch in real time.
The increase in the rate resulted from large price rises for domestic heating oil. Prices increased by 90.5% in March this year, compared with a fall of 7.5% a year ago. This resulted in a 12-month rate of 95.3%, the highest since September 2022.
I doubt those paying much higher bills for heating oil which be mollified much by lower fantasy imputed rents.
This upward effect was partially offset by a small downward contribution from owner occupiers’ housing costs, which rose in March 2026 by less than a year ago.
For those unaware of the issue here it is perfectly legitimate to include rents for those who do rent. But just over 16% of the CPIH measure is for owner occupiers and it assumes they pay rent even though the whole point of owning is that you do not pay rent.
Average UK monthly private rents increased by 3.4%, in the 12 months to March 2026 (provisional estimate). This was down from 3.6% in the 12 months to February 2026 and is the lowest annual inflation rate since March 2022.
The Cost of Living
Sadly in the rush for headlines the media mostly ignore that the UK has a cost of living measure and it did this.
The all items RPI annual rate is 4.1%, up from 3.6% last month.
It is very unpopular with HM Treasury because it consistently provides a higher number than the CPI measure.As HM Treasury finances the “independent” Office for National Statistics it has been able to get its lackey to do its bidding and engage in a campaign of disinformation against the RPI.
Also there are efforts to water down the RPI as a nuance of the new scanner data for supermarket/grocery purposes is that the arithmetic mean will be replaced by the geometric one.
What happens next?
We get a hint from this.
Monthly input prices rose by 4.4% in March 2026, up from a revised increase of 0.9% in February .
Although care is needed as it is essentially something we already knew.
The largest contribution to the annual input producer price inflation rate was an upward contribution from inputs of crude oil. This was mainly caused by high monthly growth, where prices rose by 58.8% between February and March 2026.
There was also an uptick in output inflation.
Monthly output prices rose by 0.9% in March 2026, which is up from a fall of 0.5% in February.
The main factor was this.
The largest contribution to the annual output producer price inflation rate was an upward contribution from outputs of coke and refined petroleum products. This was mainly caused by high monthly growth, where prices rose by 20.6% between February and March 2026.
As they increasingly include recreational drugs in official statistics these days let me be clear that by coke they mean the sort of thing you burn in a fire or furnace not the sort of thing you can put up your nose.
Comment
The rise of inflation begins and it comes with an irony because this was supposed to be the new UK government campaign to reduce the cost of living. Next month’s inflation release was supposed to be the major impact with the £117 reduction in domestic energy bills kicking in. So a fall for the April number is set to be followed by more rises and we are back to the UK being an inflation nation.
Some of this is caused by our energy policy and the Jedi Mind Trick that has been applied. For example so many claim there is a global price for Gas when this very week Statistics Canada published the opposite of that.
Moderating the acceleration in energy prices were lower prices for natural gas (-18.1%), which are largely dependent on North American supply and therefore more insulated from global price changes.
Also the rise in food price inflation is worrying as we have seen that before. This means that core inflation is again misleading people.
20% of global oil is trapped behind a mined strait, gasoline/diesel/jet fuel prices are up double digits, and the Fed’s preferred inflation metric excludes both food and energy. Tell me again how Core PCE reflects the real economy. ( @chigrl)
Plus our national broadcaster does not always help as I have pointed out on social media.
It was very poor of BBC Deputy Economics Editor Dharshini David to claim UK wages are outpacing prices and inflation this morning.
1. It ignores that the RPI is higher than wage growth
2. It is only true of the public-sector in isolation.