One chart shows how dramatically UK inflation accelerated in March – and it’s historic
A single chart in S&P Global’s latest flash UK PMI report captures just how violently cost pressures have slammed into the British economy this month, and the scale of the jump is unprecedented in modern history.
The chart tracks the monthly change in the UK Manufacturing PMI Input Prices Index. In March 2026, it shot up by more than 14 index points from February, the largest one-month acceleration since October 1992, the month after Black Wednesday, when sterling crashed out of the European Exchange Rate Mechanism and imported inflation exploded.
Over the month, manufacturers reported the steepest rise in input costs since October 2022. Nearly half the panel (47%) saw prices rise, while only 2% reported a fall.
The surge was overwhelmingly blamed on the war in the Middle East, with soaring fuel, transportation and energy-intensive raw materials, plus fractured supply chains as ships reroute around the Cape of Good Hope and petrochemical production in the region halts.
Across the wider UK private sector, input cost inflation hit its highest level since February 2023. Service providers weren’t spared either, though the manufacturing spike was especially brutal.
Businesses in trouble
At the same time, business activity itself has stalled. The headline S&P Global Flash UK PMI Composite Output Index fell to 51.0 in March from 53.7 in February, its weakest reading in six months.
Growth in both manufacturing (50.1) and services (51.2) slowed to a crawl. New orders declined for the first time in four months, export sales dropped sharply, and business optimism slumped to its lowest since June 2025.
“Output growth across manufacturing and services has slowed to a crawl as companies blamed lost business directly on the events in the Middle East,” said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence. “Whether through heightened risk aversion among customers, surging price pressures, higher interest rates, or via travel and supply chain disruptions.”
Bank of England has a dilemma
The data paint a painful picture for the Bank of England. Policymakers now face exactly the stagflationary mix it hoped to avoid. Softening growth and jobs alongside a sudden, sharp inflation impulse.
Williamson warned that the full impact will depend on how long the Middle East conflict disrupts energy markets and shipping routes, but March’s numbers already show the downside growth risks and upside inflation risks “have already materialised.”
While final PMI data for March will only be published in early April, the new economic reality is already clear. Inflation pressures that looked manageable a month ago have suddenly become very, very real.
