Inflation fell to 2.6% in March. While the inflation rate has decreased each month of 2025, the rate remains higher than the Bank of England’s target of 2%.
Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said:
“UK inflation dipped in March on the back of higher than expected 0.5% GDP growth figures for February released on Monday.
“Under normal circumstances businesses might feel buoyed by this, however the economic trajectory of the next few months is being driven from the White House. It is difficult for any business to plan in the current circumstances and uncertainty is going to weigh on a lot of business investment decisions.
“The ripple effect of US tariffs could affect the economy as a whole in any number of directions and impacts each business differently; there will be winners and losers. The UK could end up with an accelerated trade deal with the US or the global economy could tank. We simply don’t know and hence volatility in the markets is going to continue.
“There is a reasonable likelihood that a stronger pound, deflationary price pressures from Asia and a weaker economy could give the Bank of England more room to cut rates this year. Something will need to happen to kickstart business confidence or the uncertainty will hold sway. The butterfly wing effects of Trump’s tariffs will reverberate until we have some more certainty about how permanent the tariffs are and just how far the US and China are going to go in their bubbling trade war.”
Stuart Morrison, Research Manager at the British Chambers of Commerce, said:
“A small drop in the rate of inflation is always welcome. However, businesses fear it is the calm before the storm over the months ahead.
“Today’s data for March, covers a period before the double whammy of minimum wage and national insurance rises. Businesses are already telling us they are putting up their prices, as they battle with rising employment costs.
“Our latest survey showed business concern about inflation at 53%, up from the previous quarter. The rising global trade war will also heap further price pressure on businesses and consumers.
“Inflationary pressures mean the Bank of England is likely to remain cautious over more interest rate cuts – just when firms are keen for some financial respite.
“Businesses desperately need a lifeline from policymakers. We need to see a tax roadmap, giving firms an idea of when business rate and national insurance pressures will ease. Ministers should also focus on infrastructure and exports as a clear path to business growth in these challenging times.”
