Inflation continues to fall for the second consecutive month, raising expectations of a rate cut by the Bank of England.

UK inflation fell for the second consecutive month, easing the pressure on UK households before a significant increase in bills this month. The UK Office for National Statistics announced on Wednesday that the Consumer Price Index (CPI) rose by 2.6% in March compared to the previous year, slowing down from February's 2.8% increase. This is the lowest inflation rate since December last year, lower than the economists' and Bank of England's prediction of 2.7%. The UK Office for National Statistics stated that the slowdown in inflation was due to a decrease in prices of computer games, fuel, and stable food prices. The inflation rate in the services sector decreased from 5% to 4.7%, below the Bank of England's previous expectation of 4.9%. The Bank of England closely monitors the inflation rate in the services sector to detect signs of domestic price pressures. In March, inflation rates for goods and services in the UK decreased. The slowdown in inflation may bring some relief to UK consumers. From the beginning of this fiscal year, consumers will see basic costs such as council taxes, energy, and water bills increase by an average of 600 ($795.81). It is expected that by summer, the inflation rate will be far above 3%. However, for the Bank of England, any increase in inflation will be overshadowed by the impact of the trade war initiated by US President Donald Trump. Traders have increased bets on the Bank of England cutting interest rates. The chaotic tariff policy in the US has tightened the financial environment, leading to a drop in energy prices, a weakening US dollar, dim prospects for global economic growth, prompting traders to bet that the Bank of England will further cut interest rates - including a 25 basis point cut at the meeting on May 8. Zara Nokes, a global market analyst at J.P. Morgan Asset Management, said: "The risk of inflation has certainly not disappeared, but the Bank of England now needs to balance the risk of rising inflation with the risk of declining economic growth. If the labor market shows signs of significant deterioration after the increase in national insurance contributions by employers this month, the pressure on the Bank of England to increase interest rate cuts will only increase." After the inflation data was released, the pound against the US dollar remained on an upward trend, rising by 0.3% to 1.3273. Previously, the pound against the US dollar exchange rate hit a six-month high of 1.3289, with the potential to set a record for the longest consecutive rise since July last year. Following the release of inflation data, UK Chancellor of the Exchequer Rachel Reeves said: "Inflation has fallen for two consecutive months, wage growth is faster than inflation, and positive economic growth data are all encouraging signs that show our reform plan is working, but there is still much work to be done." At a time when Trump's tariff policy has caused market turmoil, Bank of England officials do not agree that tariffs will suppress UK inflation. In recent weeks, Bank of England officials Sarah Breeden and Megan Greene have both stated that the impact of US tariff policy on prices is still uncertain, emphasizing the importance of exchange rate trends to the outlook. Bank of England policymakers also have to deal with cooling in the labor market. Private sector forecasters have been more boldly predicting that US tariffs will mean lower UK inflation later this year. In recent weeks, major banks including Goldman Sachs and Deutsche Bank have lowered their expectations for UK price growth. Investors have also increased their bets on the Bank of England cutting interest rates faster, expecting the Bank of England to cut interest rates at least three times this year, by 25 basis points each time. Yael Selfin, chief economist at KPMG UK, said: "If potential inflation pressures continue to ease, the deflationary impact of tariffs could provide the Bank of England with more room to cut interest rates."