UK CPI rises to 3.3%; motor fuels add biggest monthly push

UK inflation moved back up in March, turning the Iran-war energy shock into hard macro data. The Office for National Statistics said CPI rose 3.3% in the 12 months to March 2026, up from 3.0% in February. On a monthly basis, CPI rose 0.7%, compared with 0.3% in March 2025. CNBC reported that the result matched the 3.3% forecast from economists polled by Reuters.

The composition matters more than the headline alone. ONS said motor fuels made the largest upward contribution to the change in both CPIH and CPI annual rates, while clothing provided the largest offset. Average petrol prices rose by 8.6 pence per litre between February and March, compared with a 1.6 pence fall a year earlier. Petrol averaged 140.2 pence per litre in March, the highest since August 2024.

The market implication sits with the Bank of England. Before the Iran war, the rate path had been leaning toward cuts as inflation cooled toward the 2% target. CNBC reported that a majority of Reuters-polled economists now expect the BOE to keep rates unchanged for the rest of the year, choosing to look through a fuel-led spike rather than tighten into weak growth.

The next data points are energy pass-through and services inflation. ONS reported CPI services inflation at 4.5%, up from 4.3%, while core CPI eased to 3.1%. If fuel fades but services stay sticky, the rate debate remains hawkish; if both cool, March may be treated as an external-price shock rather than a new inflation trend.

For gilts and sterling, the distinction matters. A one-month fuel shock can be discounted more quickly than a services-led inflation reset, but the March report gives rate-setters fewer clean data points before the next policy meeting.

Not investment advice. Verify all figures with primary sources before acting.