25 March 2026
If you are covering the latest UK inflation data, please see the following comment from Lindsay James, investment strategist at Quilter:
“Today’s inflation reading of 3% on the headline measure and 3.2% on the core gauge needs to be read with caution. It captures February, so it predates the escalation in the Middle East at the very end of the month. Markets have already priced in that shift, which means this release is effectively looking in the rear‑view mirror.
“Oil sat around $70 throughout February but has traded above $90 for most of March. European gas prices are roughly 60% higher than their February levels. Businesses are already feeling the squeeze even if households are still shielded by the lagged effect of the energy price cap. Normally the Bank of England looks through energy volatility, but the severity of the current shock has forced policymakers to signal they are ready to act if necessary. Hopes of rate cuts this year have largely evaporated, and several hikes can no longer be ruled out.
“That is why today’s CPI print is old news. It shows an economy where inflation appeared to be stabilising and was expected to drift towards 2.1% in Q2, helped by earlier gas price declines and supportive energy policy. But that benign path has already been overtaken by what has been described by the IEA as the “greatest global energy security threat in history”. For that reason, February is likely to represent the low point for UK inflation for some time.
“The real question now is how persistent this new inflationary pulse becomes. In the short term the impact may be contained. But if elevated energy prices hold, they will flow through the EPC mechanism from July and risk setting off second‑round effects across goods, services and higher wage demands. In 2022, when labour was in short supply and before the dawn of the AI era, these demands were in many cases met. However in 2026 the balance of power has changed, with employers rather than employees holding the cards."
