UMER price inflation (CPI) rose more than expected in March, according to official figures.
The Office for National Statistics said consumer price inflation rose to 3.4 per cent last month from three per cent in February, with higher fuel costs and fares for air transport also contributing to the increase.
Analysts had expected a reading of 3.2 per cent, due to an increase in petrol prices and ongoing effects from January’s rise in value-added tax as well as the record fall in gas prices in March last year.
The biggest rise came from transport, which was up a record 11.3 per cent on the year. Communication costs rose by 4.9 per cent, again the highest annual rate since records began in January 1997.
The retail price inflation gauge – which includes a broader range of housing costs – hit its highest since September 2008, rising to 4.4 percent from 3.7 per cent, versus forecasts for a rise to 4.2 per cent.
John Hawksworth, head of macroeconomics at PricewaterhouseCoopers, said: “This is expected to be only a temporary spike and we would expect inflation to be back down to around its two per cent target rate by December 2010 and to remain at or below target during 2011."