Inflation falls to 3.2% in March 2024 – lowest level since September 2021

The UK inflation rate dipped to 3.2% in the year to March, down from 3.4% in February, according to official figures. Here’s what it means for your money, with expert commentary from our CEO, Tobias Gruber. 

Current inflation rate 

The UK inflation rate has fallen to 3.2% in the year to March, according to the Office for National Statistics (ONS). This is slightly down from 3.4% in February, however remains higher than the 3.1% economists were anticipating.

The rate has moved closer toward the Bank of England’s 2% target. However, it’s worth noting that the drop means that prices are rising at a slower rate, not that prices are falling.

Why is inflation dropping in March 2024? 

In recent years, increases in energy bills and food prices have been the main causes of the UK’s high inflation. The ONS said that the fall was mainly caused by the easing of rises in food prices.

What does lower inflation mean for your money? 

A drop in inflation doesn’t mean that prices have stopped rising. Instead, it means that they’re rising at a slower pace. 

When inflation is high, The Bank of England typically responds by raising interest rates in an attempt to bring inflation back down. The idea is that by increasing interest rates, borrowing becomes more expensive and saving becomes more attractive. With the knock-on impact of less money being spent in the UK, price rises are likely to slow, causing a fall in inflation. 

A drop in inflation creates speculation that the Bank of England will cut interest rates. For borrowers, such as mortgage holders who have been suffering from rate rises, this could provide some relief. However, savers would likely face a reduction in returns from interest on their accounts.  

Commentary from our CEO

In response to today’s inflation figures, Founder and CEO of My Community Finance, Tobias Gruber, said: “Many economists are anticipating that the Bank of England will cut interest rates later this year in response to falling inflation. This will likely drive down Annual Percentage Rates (APRs) offered by savings providers, meaning the deals currently available may soon become scarce. We’ve witnessed savings providers consistently reduce the interest rates available on savings accounts already this year, so savers must act fast to secure the best rates before they vanish. 

In addition to conventional savings accounts, it's also important to explore alternative investment avenues for your money. Research a diverse range of products and don't overlook credit unions, which often offer competitive rates that outperform those of traditional high street banks."

About Tobias Gruber

Tobias Gruber is the founder and CEO of My Community Finance. For three decades, he’s been a prominent leader in investment banking and asset management for some of the sector’s most renowned banks, including Credit Suisse, SwissBank, JP Morgan and Morgan Stanley. 

In 2018, Tobias launched My Community Finance to provide access to credit for those overlooked by traditional lenders. The platform connects customers to credit unions, where they’re able to access competitive loan products.