Inflation is expected to remain steady at 2.8% next week, as growing concerns over a global trade war are yet to feed through to the UK economy.   

Deutsche Bank forecasts easing energy prices will be offset by rising food and services costs to leave the cost of living unchanged when the Office for National Statistics posts its data on Wednesday. 

The German bank expects mortgage payments to lift by 0.7% in March compared to the previous month, while rents will rise by 0.4%. 

Deutsche Bank senior economist Sanjay Raja says in a note to clients, “we expect inflation to move sideways in March”, but adds, “risks are skewed to the upside”. 

This comes as the UK growth rose by a greater-than-expected 0.5% in February, official figures showed today, boosted by a strong services performance. 

Markets had expected a 0.1% rise, but economists say the UK economy is braced against the impact of tariffs imposed on goods being imported to the US. 

Earlier this week, US President Trump stepped back from the brink of a global trade war yesterday, saying he would put a 90-day pause on plans to impose sweeping “reciprocal” tariffs against more than 60 countries around the world.  

But baseline tariffs of 10% on most nations, including the UK, remain.   

However, China lifted its tariff on US goods to 125%, in retaliation to import charges of 145% on Chinese products set by the US. 

Market watchers say these moves by the world’s two biggest economies will affect trade prices around the world. 

AJ Bell head of investment analysis Laith Khalaf points out: “The Bank of England will be keenly aware the inflationary outlook isn’t entirely one-sided.  

“Cheaper oil will push down on UK inflation, giving the Bank of England scope to cut rates without worrying about rising prices.  

“Likewise cheaper goods flowing into the UK instead of the US could help dampen inflation.  

“However, on the flip side of the coin, exchange rate movements could create inflationary headwinds.” 

Deutsche Bank forecasts “inflation picking up further through the spring and summer” to peak at 3.7% this year.