A gauge of British manufacturers' inflation expectations fell to its lowest in two years after output slid again in the three months to March, the Confederation of British Industry's (CBI)said on Wednesday.

The CBI's gauge of expected selling prices fell to +25 in March, the lowest since March 2021 and down from +40 in February but still strong in historical terms.

The net balance for manufacturing order books fell to -20 from -16, the weakest reading since February 2021. A Reuters poll of economists had forecast a reading of -15.

Export orders fell to -23 from -27.

"Falling output and softer order books highlight the challenging demand environment for UK manufacturing," Anna Leach, deputy chief economist at the CBI, said.

"Together with some easing of input costs, this seems to be feeding through to a marked weakening in selling price expectations for the next quarter."

The survey of 264 manufacturers took place between Feb. 23 and March 14. (Reporting by Suban Abdulla Editing by William Schomberg Editing by William Schomberg)