AL consumer price inflation rose more than expected in March, pushed up by higher petrol prices and air fares, as well as by household gas bills, which failed to repeat last year’s record drop.
The Office for National Statistics yesterday said consumer price inflation increased to 3.4 per cent last month from three per cent in February, well above the Bank of England’s (BoE) two per cent target and economists’ expectations of a rise to 3.2 per cent.
While inflation for the first quarter is very close to the central bank’s February forecast, the CPI rate is not showing the steady decline from January’s 14-month peak that policymakers had hoped for based on general economic weakness.
One factor making it harder to forecast inflation has been uncertainty about how much retailers are passing on higher import costs caused by sterling’s 20 per cent fall since the start of the financial crisis.
Clothing and footwear prices, which have been pushed down by cheap imports for years, fell by their smallest amount since July 2007 – one reason Deutsche Bank economist George Buckley gave for inflation exceeding the Bank of England’s forecast.