Overview

The latest figures from the Office for National Statistics (ONS) show that UK inflation moved higher in March 2026. Consumer Prices Index (CPI) inflation increased from 3.0% to 3.3%, reversing the stabilisation seen earlier in the year. The Retail Prices Index (RPI) also rose sharply from 3.6% to 4.1%.

Geopolitical tensions, including military action and disruption to oil shipments through the Straits of Hormuz, continue to push up energy and transport costs. These pressures are now feeding more broadly into the economy.

What’s Driving the Increase?

Inflation remains uneven across sectors. The largest upward contributions came from:

• Transport (+2.3 percentage points) – driven by higher fuel and logistics costs.
• Housing & household services (+0.7) – reflecting elevated energy and rental pressures.
• Food & non‑alcoholic beverages (+0.4) – ongoing supply chain and commodity cost pressures.

Some discretionary categories saw price declines, including clothing, furniture, and household goods.

CPI Category Breakdown (Annual % Change)

RPI: A Sharper Rise

RPI, which uses a different calculation method (arithmetic mean rather than geometric), rose 0.5 percentage points to 4.1%. This measure tends to run higher than CPI and is still used for some wage negotiations, rail fares, and index‑linked contracts.

What This Means

• Interest rate cuts are unlikely in the near term. Central banks will want clearer evidence that inflation is returning to target.
• Energy and transport costs remain the key risk areas, particularly given ongoing geopolitical uncertainty.
• April’s inflation figure may show temporary relief due to the removal of last year’s high April 2025 base, but underlying pressures remain elevated.

Key Dates to Watch

• 29 April 2026 – US Federal Reserve interest rate decision
• 30 April 2026 – Bank of England MPC interest rate decision
• 30 April 2026 – European Central Bank interest rate decision
• 20 May 2026 – Next ONS UK inflation release

FAQs: UK Inflation – March 2026 

1. What happened to UK inflation in March 2026?

CPI inflation rose from 3.0% to 3.3%, reversing the stabilisation seen earlier in the year. RPI increased from 3.6% to 4.1%.

2. Why did inflation rise this month?

The main drivers were:

• Higher transport costs, linked to rising oil prices and supply disruptions.
• Persistent pressure in housing and household services, including energy.
• Continued increases in food and non‑alcoholic beverage prices.

Geopolitical tensions and the disruption of oil flows through the Straits of Hormuz have added to cost pressures.

3. Which categories saw the biggest increases?

The largest rises were in:

• Transport: +2.3 percentage points
• Housing & household services: +0.7
• Food & non‑alcoholic beverages: +0.4
• Recreation & culture: +0.3

Some categories fell, including clothing, furniture, and household goods.

4. What is the difference between CPI and RPI?

• CPI uses a geometric mean and is the UK’s official inflation measure.
• RPI uses an arithmetic mean, tends to run higher, and is still used for some wage negotiations, rail fares, and index‑linked contracts.

5. Why is RPI higher than CPI?

RPI’s calculation method tends to amplify price increases. It also includes housing costs such as mortgage interest, which can rise when interest rates are high.

6. Will interest rates be cut soon?

Based on current inflation trends, rate cuts are unlikely in the near term. Central banks will want clearer evidence that inflation is returning sustainably to target.

7. Could inflation fall in April 2026?

Possibly. April’s figure may benefit from the removal of unusually high April 2025 prices (a “base effect”). However, underlying pressures remain elevated, so any fall may be temporary.

8. How do geopolitical events affect inflation?

Events such as military conflict or disruption to major shipping routes can:

• Push up oil and energy prices
• Increase transport and logistics costs
• Feed through to broader consumer prices

This is a key factor in the current inflation uptick.

9. Which categories are seeing price declines?

The largest falls were in:

• Clothing & footwear: –1.7%
• Furniture & household goods: –0.5%
• Alcohol & tobacco: –0.3%
• Communication: –0.2%

These areas tend to be more sensitive to consumer demand and discounting.

10. What key dates should clients be aware of?

• 29 April 2026 – US Federal Reserve interest rate decision
• 30 April 2026 – Bank of England MPC interest rate decision
• 30 April 2026 – European Central Bank interest rate decision
• 20 May 2026 – Next ONS inflation release