Money blog: Inflation falls unexpectedly - with unusual product having biggest impact (2025)

Soft drinks company Robinsons is the latest company to take Aldi on in the courts - accusing the supermarket of trademark infringement.

It filed the complaint at the High Court on 19 March, though it's not clear what product the case centres on given the lack of detail available publicly.

Lawyers have previously noted similarities in the appearance of Aldi's Sun Quench Squirty Squash and Robinsons' Mini.

Robinsons is represented by the same firm that successfully won a claim for M&Sagainst Aldi over a copycat gin liqueur.

Money has approached both Aldi and Britvic, Robinsons parent company, for comment.

Away from the spring statement and inflation for a moment - and we've had a big announcement from the National Lottery operator...

The UK's biggest-ever lottery jackpot could be won in Friday's EuroMillions draw.

The jackpot is an estimated £202m, Allwyn said.

Nobody won the £182m EuroMillions jackpot on Tuesday, meaning the top prize rolls over into Friday's draw.

The potential winner would top the ranks of the biggest EuroMillions wins by UK players, including the anonymous UK ticket-holder who scooped the existing record jackpot of £195m in July 2022.

Just two months ago, Joe and Jess Thwaite, from Gloucester, won a then record-breaking £184m with a Lucky Dip ticket for the draw.

Andy Carter, senior winners' adviser at Allwyn, said if one ticket-holder takes home Friday's prize, they "would be crowned the National Lottery's biggest winner of all time".

We're moving away from inflation data now to look ahead to the chancellor's spring statement this afternoon.

Rachel Reeves will appear in the House of Commons at 12.30pm to give an update on her plans for the economy.

Here are some of the announcements we are expecting her to make:

Welfare cuts

There have been a lot of welfare cuts that we know will be announced today, including a freeze on the personal independence payment (PIP) at up to £9,000 a year for people with long-term disabilities.

Work and Pensions Secretary Liz Kendall announced on 18 March the government will also abolish the work capability assessment in 2028, which determines whether someone on universal credit is fit to work.

Reeves is now expected to announce that universal credit (UC) incapacity benefits for new claimants will also be frozen until 2030 rather than rising in line with inflation.

As originallyreported by The Times,there will also be a small reduction in the basic rate of UC in 2029.

Defence spending

The chancellor is expected to announce £400m in spending on the government's new UK Defence Investment body to "harness UK ingenuity and boost military technology".

Defence Secretary John Healey told Sky News that Reeves will promise to increase defence spending by £2.2bn from April.

Some of this money is expected to come from the international aid funding.

Cash ISAs

The investment industry called on Reeves to reduce the £20,000 tax-free annual limit on cash ISAs to £4,000 to encourage more people to invest their savings in stocks and shares.

The change has been mooted for the spring statement but could be held for the budget in the autumn.

You can read more about why you should make the most of your cash ISA in this week's Savings Guide below...

While the 2.8% inflation figure will bring a boost to the chancellor before she delivers her spring statement, there's plenty of other economic data that's working against her to paint a dismal view of the economy...

GDP

Despite Rachel Reeves' pledge for growth, the economy remains close to stagnation.

Official figures show GDP has barely budged, with a 0.1% rise reported during the final quarter of last year and a contraction of 0.1% recorded in January.

GDP, or gross domestic product, is used to assess the size and health of the economy.

It measures the monetary value of final goods and services produced in the country over a given period.

Liz McKeown, director of economic statistics at the Office for National Statistics, said: "The economy shrank a little in January but grew in the latest three months as a whole, with the overall picture continuing to be of weak growth.

"The fall in January was driven by a noticeable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.

"However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more."

Economic forecasts

The UK's economic forecast was recently downgraded by the Organisation for Economic Co-operation and Development and the Bank of England.

The OECD slashed its prediction of 1.7% growth to 1.4% by the end of the year.

It warned that "further fragmentation of the global economy" was a significant concern amid trade tensions sparked by US President Donald Trump that would likely increase inflation.

The Bank of England made an even harsher revision, saying the economy is now expected to grow by 0.75% in 2025 instead of a previously predicted 1.5%.

Later today, the Office for Budget Responsibility will release its latest forecast, which is widely expected to follow suit.

Here our data and economics editor Ed Conway looks at how much income we are generating in the UK...

Borrowing costs

The government's borrowing costs have also risen sharply since Reeves's October budget.

The yield, which is essentially the interest rate charged on 10-year government bonds, is around 4.7%.

The ONS has said public sector net borrowing was £10.7bn in February - £100m more than the same month last year and the fourth-highest February on record.

It was also £4.2bn more than had been forecast by the OBR.

Interest rate

The Bank of England interest rate is 4.5% and its next decision will be made on 8 May.

The markets expect two more rate cuts this year after this morning's inflation data.

Lower interest rates help to ease pressure on households, businesses and government borrowing.

The dip in inflation could bring borrowers a boost, but it might not be a long-lasting one, mortgage brokers have said.

Several experts have pointed out that the fall to 2.8% could translate into lower interest rates and therefore better mortgage deals.

David Hollingworth, associate director at the UK's largest fee free broker L&C Mortgages, says: "Although a slight reduction in the rate of inflation had been expected, today's figures have outstripped expectation.

"That can have positive implications for mortgage rates if it helps to boost the market's outlook for interest rate movements."

As we explained in our previous post, markets are now expecting two interest rate reductions from May until the end of 2025.

But Hollingworth warns that today's news might not be enough to significantly shift mortgage rates.

"Rates have been much more stable recently, with most lenders making small improvements when they can. Although today's figures are positive, I don't expect to see a significant change to that pattern. Similarly, we'll hope that markets will give a calm reception to any inflation increases in the months to come," he says.

His thoughts were echoed by Ben Perks, managing director at Orchard Financial Advisers: "That tiny little dip under 3% could have a butterfly effect on the mortgage rates available to borrowers.

"Don't get too comfy, though, as we've seen inflation jiggle up and down over the past few years."

By James Sillars, business and economics reporter

With so much attention on Westminster today (it's the spring statement, in case you missed it), I want to take you over to the City of London for a moment.

Specifically, let's focus on Threadneedle Street where the Bank of England resides.

We've seen a shift in interest rate expectations after this morning's inflation data, which showed a slightly bigger easing than financial markets and economists had expected.

Ahead of the ONS figures, a small majority of market participants had expected no change to Bank rate when its rate-setting committee announces its next decision on 8 May.

Now, we see a small majority forecasting a cut.

Two reductions are now fully priced in from May and the end of 2025.

There are big potential threats lurking, however, around the prospects for interest rate cuts ahead.

The Bank fears businesses passing on budget tax hike costs that are due to come in from April.

There is also the possibility that Donald Trump follows through on his pledge of a big escalation in his trade war from next week, a scenario that also poses a big risk to the pace of price growth.

In short, it's too early to call what may happen in May.

While today's inflation figure was unexpected, the reaction from the shadow chancellor is not...

Mel Stride has said the rate, which is higher than the government's 2% target, is due to choices made by Rachel Reeves.

"Inflation remains higher than when Labour took office and the Bank of England expect it to rise over the coming year," he said.

"We left Labour with inflation bang on target. But since their no-strings-attached union payouts, record tax rises and borrowing splurge, they have pushed up the cost of living.

"The chancellor's choices have saddled the country with higher inflation for longer. Unless she takes urgent action at her emergency budget today, working families will continue to pay the price."

Reeves will appear in the House of Commons at 12.30pm to deliver her spring statement.

Full coverage will be in our Politics Hub- while here in Money we'll dig into how the chancellor's announcements will affect your wallet.

UK inflation has come in lower than expected at 2.8% in February - but how does that compare to other countries?

Our inflation rate is the same as the US, but it is significantly higher than our European counterparts.

France has managed to get it to 0.8% in February, down from 1.7% in January.

In the Eurozone, which covers all 20 countries in the European Union, the rate is more similar at 2.3%, down from 2.5% in January.

While the chancellor hasn't commented on the latest inflation figures (her focus will undoubtedly be on her spring statement this afternoon), we have had a response from the Treasury's chief secretary.

Darren Jones says the government's "number one mission" is kickstarting the economy and raising living standards.

"That is why we are protecting working people's payslips from higher taxes," he says.

"In a changing world, we're focused on delivering economic stability to secure people's finances - freezing fuel duty, protecting the triple lock and increasing the national living wage by £1,400 a year for full-time workers, while going further and faster to drive growth through our plan for change."