The largest downward contribution to the monthly change came from recreation and culture, and motor fuels, with a further large downward effect in CPIH from housing and household services; the largest, partially offsetting, upward contribution came from clothing.

Last week, economists predicted that the cost of living would remain steady at 2.8% as growing concerns over a global trade war are yet to feed through to the UK economy.

US President Trump stepped back from the brink of a global trade war last week, saying he would put a 90-day pause on plans to impose sweeping “reciprocal” tariffs against more than 60 countries around the world.

But baseline tariffs of 10% on most nations, including the UK, remain. However, China lifted its tariff on US goods to 125%, in retaliation to import charges of 145% on Chinese products set by the US.

Market watchers say these moves by the world’s two biggest economies will affect trade prices around the world.

Commenting on the latest inflation data, MPowered Mortgages head of product Peter Stimson says the Bank of England “no longer have a reason not to cut when they meet on 8 May, and plenty of reasons to do so”.

On 20 March, the Bank of England voted to maintain the interest rate at 4.5%.

Rate-setters at the Bank’s Monetary Policy Committee voted 8–1 to hold, with external member and long-time dove Swati Dhingra pushing for a quarter-point cut.

Policymakers reiterated their “gradual and careful approach” in the minutes of the March decision and stated that “greater or longer-lasting weakness in demand relative to supply” could push down inflation and lead to further cuts.

Stimson explains: “CPI is still well above its 2% target, and in normal times there would be a genuine debate among members of the Bank’s rate setting committee about whether a rate cut might be delayed in order to push inflation down further.”

“But these are not normal times, and the committee will instead park its concerns about inflation to focus on shoring up the economy from the recessionary juggernaut fuelled and dispatched by the White House.”

“However, May’s all-but-certain base rate cut is unlikely to translate into a further wave of mortgage rate cuts next month.”

“The reason for this is that mortgage lenders price their fixed-rate loans according to swap rates, which are a forecast for the future course of the base rate, rather than the base rate of the day.”

“Swap rates have fallen since Donald Trump’s ‘Liberation Day’ tariff announcement two weeks ago, and many lenders have responded by cutting their mortgage rates accordingly.”

“At present the swap rates imply that the base rate will be cut twice more this year after May. In theory that would see the base rate go below 4% by Christmas, but Donald Trump’s disruptive power means much could change between now and then.”

interactive investor senior personal finance analyst Myron Jobson states that the cooling of inflation in March is a “welcome development” but highlights it “could be calm before the storm”.

Jobson comments: “This triple threat of headwinds could mean that the road back to the Bank of England’s 2% inflation target is longer and includes further twists and turns.”

“The big question for the Bank of England is how to balance the risk of inflation rising again with the need to stimulate greater economic growth – and what that means for interest rates.”

“A rate cut in May seems increasingly nailed on, and the market has priced in further cuts amid concerns of an economic slowdown triggered by tariffs.”

While today’s figures are positive and better than expected, Just Mortgages chief executive officer John Phillips says it’s “hard not to see today’s news of another fall in inflation as a bit of a hollow victory, given that the new financial year brings new tax changes and price hikes which will undoubtedly add fuel to the inflationary fire”.

Phillips states: “That’s not even considering any potential fallout from a tit-for-tat tariff war which rumbles on.”

“What is good news is that a positive reading on inflation is likely to help influence the MPC’s decision next month on interest rates, as will the need to stimulate growth amid the threat of economic uncertainty.”

“With expectations of a cut, we have already seen swap rates react favourably and lenders across the board announce reductions. With so much in play and plenty of headwinds – both at home and abroad – it’s hard to predict with any great certainty how long this trend will continue.”

“One of the biggest factors will continue to be the future path of inflation and how this shifts the bank’s expectations on future interest rates.”