Falling Inflation in the UK: A-Level Business In The News

Have a go at this teaching activity, which includes a downloadable worksheet and suggested answers.

What's the story?

The UK's inflation rate slowed to 3.2% in the year to March 2024, down from 3.4% the previous month. This was driven by falling prices for some items like meat, crumpets, chocolate biscuits, furniture, and household goods. However, petrol and diesel prices rose.

While the overall inflation rate has decreased, prices are still significantly higher than they were two years ago. The drop in inflation does not mean prices are coming down, but rather that they are rising at a slower pace.

Food and energy prices were the main contributors to the UK's high inflation over the past few years, with food and non-alcoholic drink prices reaching almost 20% last year, the highest level since the 1970s.

Despite the slowdown in inflation, consumers like Miles Johnson in London are still feeling the strain of high prices and are actively seeking ways to save money.

Economists expect the Bank of England to cut interest rates later this year, potentially as early as June, as inflation is projected to return to the 2% target in the spring. Chancellor Jeremy Hunt welcomed the lower inflation figures, stating that people should start to feel the difference in their pay due to lower inflation and the recent National Insurance cut.

The UK's inflation rate is now below that of the United States for the first time since early 2022, raising the prospect of the Bank of England cutting rates before the US Federal Reserve.

Private rents in England also increased by 9.2% in the year to March, averaging £1,285.

Falling inflation in the UK