Business Price Rises Expected to Slow as Inflation Pressures Ease

The Confederation of British Industry reports selling price expectations have moderated in March, offering hope for household budgets across Kent.

Businesses expect their selling prices to rise more slowly in the coming months. The Confederation of British Industry announced the shift in a social media post yesterday, stating that average selling price inflation expectations had eased in March.

The business group said expectations now stand “marginally above the long-run average” — a marked improvement from recent months when inflation pressures squeezed both companies and consumers.

View tweet from @CBItweets

The Numbers Behind the Slowdown

Official figures show headline inflation stood at 3.4% in December 2025. But the Bank of England expects this to fall sharply to 2.1% by the second quarter of 2026.

The Ofgem energy price cap will fall from £1,758 to £1,641 in April — a reduction of £117, or around 7%, for typical dual-fuel households paying by direct debit. The drop is largely driven by the government scrapping the Energy Company Obligation levy and shifting green levies to general taxation.

Services and food prices are also cooling. The Bank expects services inflation to moderate to 3.3% by June, while food price rises should slow to 2.4%. Both figures remain above their 2012-19 averages but represent significant progress.

Firms themselves are becoming less pessimistic about future price rises. Their one-year-ahead inflation expectations averaged 3.2% in the three months to January — down from 3.4% previously.

Why the Caution Remains

Yet the Bank of England held interest rates steady in March despite the improving picture. Global energy prices have risen again due to Middle East conflict, potentially delaying the return to the 2% inflation target.

Alpesh Paleja, Deputy Chief Economist at the CBI, has warned that these global energy shocks could push overall inflation higher. This explains the Bank’s cautious approach to rate cuts.

Wage growth continues to ease, supporting the broader disinflation trend. But medium-term expectations remain somewhat elevated compared to pre-pandemic levels.

What Went Right

The moderation reflects several factors working together. Energy prices have fallen from their peaks. Budget measures have provided additional support through lower bills.

Supply chain pressures have also eased compared to the post-pandemic period. This has allowed businesses to absorb cost increases rather than passing them all to consumers.

Source: @CBItweets

Key Takeaways

Business selling price expectations eased in March and now stand marginally above long-run averages

UK inflation is projected to fall from 3.4% in December to 2.1% by Q2 2026

Energy bill support will cut the typical household cap by £117 from April

What This Means for Kent Residents

Easing price pressures should help stabilise household costs across the county, where energy bills form a significant expense for families relying on South East grid supplies. Kent businesses — especially in manufacturing and agriculture — may benefit from moderated input costs, boosting competitiveness through major trade routes like Medway Ports. Residents should check their eligibility for the Warm Home Discount to maximise savings when the April Ofgem cap reduction takes effect.

Source: @CBItweets

Published: 23 March 2026

Source: @CBItweets on X. This article has been researched and rewritten with editorial balance by Kent Local News.