Calm Before the Storm: UK Inflation Slowdown Amid Global Trade Tensions

UK inflation fell to its lowest rate in three months in March, driven by drops in computer games and fuel prices. However, rising utility bills and trade tensions could soon raise inflation. Experts suggest a possible BoE interest rate cut amidst ongoing global economic uncertainties influenced by US trade tariffs.

March saw UK inflation drop to its lowest level in three months, easing to an annual rate of 2.6% from February's 2.8%. The decline was attributed to price falls in computer games and fuel, despite significant rises in clothing costs, according to the Office for National Statistics.

However, experts warn this respite could be brief. Michael Saunders, a former Bank of England interest rate-setter, said upcoming hikes in utility prices and employer taxes might push inflation to 3%. Additionally, US trade wars under President Donald Trump's administration pose further risks, hinting at economic turbulence.

Amidst these pressures, financial markets anticipate a BoE interest rate cut in May. This decision would follow new US tariffs, which could both elevate and depress UK inflation. The trade conflict with China may also redirect cheaper exports to Europe, further complicating inflation forecasts.

(With inputs from agencies.)