UK Inflation Slows, China Sees Strong Growth: While the United Kingdom experienced a decline in inflation during March,
Strengthening expectations of a possible interest rate cut,
The Chinese economy surprised markets by posting strong retail sales and industrial production growth,
marking the highest levels over the past year.
In this report, we review key UK inflation indicators and the impact of monetary policy.
We also analyze Chinese economic data and what it signals about the shifting growth momentum in Q1 of 2025.

Contents

UK Inflation

China

UK Inflation Slows in March… and Rate Cut Expectations Rise Amid Trump’s Trade Pressure

The inflation rate in the United Kingdom decelerated in March,
Driven by falling fuel prices and stable food costs.
This was despite a notable rise in clothing prices following an unexpected drop in February.

According to data released Wednesday by the Office for National Statistics,
the Consumer Price Index (CPI) rose by 2.6% year-on-year,
lower than expectations of a 2.7% increase and below February’s reading of 2.8%.

Core inflation, which excludes volatile items such as energy and food, rose by 3.4% in March,
slightly down from 3.5% in February.
This reflects a modest decrease in underlying price pressures.

Inflation in the UK likely hasn’t peaked yet.
The Bank of England estimates it could reach 3.7% in the third quarter of 2025—
nearly double the official 2% inflation target.

“Given these developments, expectations are rising that
The Bank of England could cut interest rates at its next meeting on May 8,
Following a decision to keep them steady at 4.5% in March.
“Ongoing concerns about inflation and growing uncertainty over U.S. President Donald Trump’s
Protectionist trade policies push the Bank of England toward a potential rate cut.”

China Outperforms Expectations in March: Retail and Industrial Growth at Highest Level in Over a Year

Official data released Wednesday morning revealed robust economic performance in China during March.
Retail sales grew by 5.9% year-on-year — the fastest pace in 15 months,
beating analyst forecasts of a 4.2% rise and surpassing February’s 4% increase.

In another sign of improving economic activity, industrial production surged by 7.7% in March,
the highest rate since June 2021, and well above market expectations
that had projected growth to remain at February’s 5.9% pace.

On the labor front, the National Bureau of Statistics reported that the unemployment rate fell to 5.2% in March,
below forecasts of 5.3% and improving over February’s 5.4%.
This indicates a slight recovery in job market conditions despite ongoing challenges.

These indicators point to accelerating economic momentum in China during Q1 2025,
supported by strong domestic demand and an upturn in industrial activity,
even as some pressure remains in the labor market.

UK Inflation Slows, China Sees Strong Growth

UK Inflation Slows, China Sees Strong Growth

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