UK CPI rises to 3.3%; motor fuels add biggest monthly push
Original: UK inflation jumps to 3.3% in March as fuel prices surge amid Iran war View original →
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.
| Measure | March 2026 | February 2026 |
|---|---|---|
| CPI annual rate | 3.3% | 3.0% |
| CPI monthly rate | 0.7% | 0.3% in March 2025 comparison |
| CPIH annual rate | 3.4% | 3.2% |
| Core CPI annual rate | 3.1% | 3.2% |
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.
Related Articles
April U.S. Producer Price Index jumped 6.0% year-over-year (consensus: 4.8%) and 1.4% month-over-month (consensus: 0.5%), marking a four-year high for wholesale inflation. Core PPI hit 5.2% YoY against a 4.3% estimate, driven by energy price surge from the 11-week Iran-Gulf conflict. Bank of America pushed its first Federal Reserve rate-cut forecast to July 2027, with Kalshi prediction markets now pricing 47% odds of a hike before that date.
U.S. consumer prices rose 3.8% annually in April — 0.1 percentage point above the Dow Jones consensus and the highest since May 2023. Energy prices surged 17.9% year-over-year as WTI oil topped $100 per barrel amid the Iran-Hormuz conflict, while real average hourly wages turned negative on an annual basis for the first time in three years. CME Group data shows markets now pricing roughly 30% probability of at least one Fed rate hike before year-end.
May nonfarm payrolls rose 172,000, more than double the 80,000 Dow Jones consensus, while unemployment held at 4.3%. CNBC, citing the Bureau of Labor Statistics report, said Treasury yields moved sharply higher as the labor surprise reduced near-term Fed-cut odds.