UK inflation slowed to 3.2% in March, down from 3.4% in February, but still above the Bank of England's 2% target.

Core inflation, excluding volatile food and energy prices, stands at 4.2%.

Economists anticipate a further slowdown in inflation, with a potential drop below the 2% target due to lower domestic energy bills.

Despite the inflation rate decrease, the Bank of England has maintained the key interest rate at 5.25% for the fifth consecutive meeting.

The US reported a higher inflation rate of 3.5% in March, hinting at divergent monetary policy paths between the US and Europe.

The UK's labor market shows mixed signals with a slight increase in unemployment to 4.2%, decelerating wage growth, but a rise in job vacancies.

The economic outlook for the UK remains complex with Chancellor Jeremy Hunt viewing the latest data as positive, yet the Bank of England is cautious due to concerns over potential Britons' payment defaults.