UK consumer price inflation softened less than expected in March but hit the lowest in two-and-a-half years on food prices, adding uncertainty to the timing of the first interest rate cut from the Bank of England.

Inflation weakened to 3.2 percent in March from 3.4 percent in February, the Office for National Statistics reported Wednesday. However, this was slightly faster than the economists’ forecast of 3.1 percent.

The March inflation was the lowest since September 2021, when it was 3.1 percent.

At the same time, core inflation that excludes energy, food, alcohol and tobacco, eased to 4.2 percent from 4.5 percent in February. The rate was seen at 4.1 percent.

The largest downward contribution to overall inflation came from food, while prices of motor fuels exerted the largest upward contribution.

Although services inflation, which the Bank of England closely monitor, eased in March, it stood at 6.0 percent compared to 6.1 percent in February.

Capital Economics’ economist Ruth Gregory said the smaller-than-expected fall in inflation and the core rate raise the risk that inflation will follow the trend in the US and soon stall.

If inflation continues to ease more slowly or stalls as it has in the US or if there is a big jump in energy prices triggered by tensions in the Middle East, the BoE would conclude that interest rates need to stay at 5.25 percent for longer, the economist added.

ING economist James Smith said the latest data trims the chances of a rate cut in May or June and continues to expect the first move in August.

In March, the bank had projected CPI inflation to fall slightly below the 2 percent target in the second quarter of 2024.

The BoE had kept its interest rate for the fifth consecutive session last month. The current 5.25 percent is the highest since early 2008.

On a monthly basis, the consumer price index moved up 0.6 percent, the same as in February.

Another data from the ONS showed that input prices declined for the tenth consecutive month in March. Input prices fell 2.5 percent from a year ago in March, worse than a revised fall of 2.2 percent in the year to February.

On a monthly basis, input prices edged down 0.1 percent, reversing a 0.3 percent rise in February.

By contrast, factory gate inflation rose to 0.6 percent, the strongest since May 2023, from 0.4 percent in the previous month. The monthly inflation slowed to 0.2 percent from 0.3 percent in February.