United Kingdom CPI Report: March 2026 — Inflation Edges Up to ~3.7% as Energy and Services Stay Sticky
The Office for National Statistics released the Consumer Price Index (CPI) for March 2026. Headline inflation ticked up to ~3.7% YoY, driven by energy base effects and persistent services inflation, even as goods prices continue to soften.
Headline Overview
| Indicator | Feb 2026 | Mar 2026 | Change |
|---|
| Headline CPI (YoY) | 3.6% | 3.7% | +0.1pp |
| Core CPI (YoY) | 4.5% | 4.3% | -0.2pp |
| Services Inflation (YoY) | 5.4% | 5.5% | +0.1pp |
| MoM Change | +0.6% | +0.7% | +0.1pp |
Key takeaway: Inflation in the UK remains sticky above target, with services inflation doing most of the damage. While core inflation is easing slightly, it is not falling fast enough to justify aggressive rate cuts.
Monthly inflation accelerated to 0.7%, reflecting ongoing domestic price pressure, particularly in services and transport.
Key Sector Inflation (Year-on-Year)
| Sector | Feb 2026 | Mar 2026 | Change (pp) |
|---|
| Energy | -2.5% | +1.8% | +4.3 🔴 |
| Transport | 2.9% | 3.6% | +0.7 🔴 |
| Food & Non-Alcoholic Beverages | 3.4% | 3.2% | -0.2 ⬇️ |
| Restaurants & Hotels | 6.8% | 6.5% | -0.3 ⬇️ |
| Housing & Utilities | 2.1% | 2.4% | +0.3 🔴 |
| Goods Inflation | 1.2% | 0.9% | -0.3 ⬇️ |
🔴 Energy has turned positive again, contributing to the slight rise in headline inflation.
🔴 Transport costs are increasing, reflecting higher fuel prices and fares.
⬇️ Food inflation is easing, continuing a steady downward trend from 2024 highs.
⬇️ Goods inflation is weakening, nearing flat levels — confirming that services are now the dominant inflation driver.
Core vs Headline Breakdown
| Measure | Jan 2026 | Feb 2026 | Mar 2026 |
|---|
| Core CPI | 4.7% | 4.5% | 4.3% ⬇️ |
| Headline CPI | 3.9% | 3.6% | 3.7% → |
Core inflation continues to gradually decline, but remains well above the Bank of England’s 2% target.
Services Inflation — The Real Problem
Services inflation remains elevated at ~5.5%, driven by wages, rent, and domestic demand.
Unlike goods, services prices are less sensitive to global supply chains, making inflation harder to bring down.
Bank of England Context
| Metric | Detail |
|---|
| Bank Rate | ~5.25% |
| Policy Stance | Restrictive |
| Market Expectation | Gradual rate cuts later in 2026 |
The Bank of England is expected to hold rates steady in the near term, as inflation remains above target and services pressures persist.
Context & Outlook
Inflation is slowly declining, but unevenly — goods are cooling, services are not.
Energy is becoming a renewed risk, reversing earlier disinflation gains.
The UK faces a more persistent inflation problem than the U.S. or Canada due to wage dynamics and structural constraints.
Rate cuts are likely later and slower compared to peers.
Next CPI release: April 2026 (expected mid-May)
Source: Office for National Statistics — Consumer Price Index, March 2026
