This was followed by social and other renter households, who saw the cost of living rise by  3% over the period, reports the Office for National Statistics. 

Private rents lifted by 7.4% on average in May to £1,335 a month, from a year ago, according to ONS provisional estimates earlier this month.     

Today’s data from the numbers body shows that average household costs rose by 2.6% in the year to March, a fall from 2.9% in the year to December. 

Outright owner occupiers saw the lowest annual inflation rate of all tenure types, at 1.8%, while those with mortgages had the next lowest, at 2.8%. 

Working households continued to experience a higher annual rate of inflation, at 2.8%, compared to retired households, at 2.1%. 

These figures come after official data earlier this month showed that inflation rose to 3.5% in the 12 months to April from 2.6%. 

The cost of living was pushed up by housing and household services costs, transport, recreation and spending on cultural activities. 

Hargreaves Lansdown head of personal finance Sarah Coles says: “Inflation eased in early 2025, but it still put a real squeeze on lower earners and renters.  

“Unfortunately, life is only going to get tougher, as shortly after these figures were calculated, Awful April hit hard. Those same groups are likely to face the biggest challenges in the months to come.” 

However, Coles points out that some “groups are under less pressure”. 

She says: “There was a slowing of the rises in mortgage interest payments. These are still increasing, because so much of the mortgage market is fixed, so previous rises in interest rates continue to feed into higher overall rates as people are forced to remortgage.  

“However, the rates they’re remortgaging onto have fallen back slightly – so the gap is closing. If they continue on this path, it should make life easier for those who own with a mortgage. 

Coles adds: “Inflation has also dropped for higher earners. At 2.7%, down from 4.7% a year earlier, this will be manageable for many households, because their finances tend to be far less stretched than among those on lower incomes.” 

ARLA Propertymark argues that cutting charges for landlords would bring down rents. 

ARLA Propertymark president Angharad Trueman says: “With private rents seeing their highest annual inflation rate in March 2025, it remains more vital than ever the government and the devolved administrations take a wide angle view regarding taxes impacting the private rental sector and look at ways to encourage and support new investment for the long term. 

“Currently such factors are sadly contributing towards driving up costs and reducing the supply in some areas for rental properties.”