UK Inflation Slows Before Expected Jump from April

• British inflation slowed to its weakest in three months in March, and other measures watched by the Bank of England (BoE) cooled too, but higher bills and employer costs will pressure prices soon against the backdrop of U.S. President Donald Trump's trade war.
• Inflation slowed to an annual rate of 2.6% in March from 2.8% in February, below expectations of 2.7% in the BoE forecast and a Reuters poll of economists. A price drop for computer games and falling fuel prices helped bring down the headline rate, although the prices of clothes rose strongly after a surprise fall in February, the Office for National Statistics said.
• "This is very much the calm before the storm," former BoE interest rate-setter Michael Saunders said, pointing to April's increases in gas, electricity and water prices, alongside higher taxes on employers, which could push inflation to 3%.
• The BoE, which has an inflation target of 2%, said in February it expected inflation to leap to 3.6% in April as regulated tariffs for household utility bills go up.
• Since those forecasts were made, Trump's decision to impose sweeping trade tariffs has raised the prospect of a slowdown in the global economy. Martin Sartorius, principal economist at the Confederation of British Industry, said the higher US tariffs could put both upward and downward pressures on inflation in the UK, but that the BoE was likely to cut interest rates next month.

(Source: Reuters)