SOARING food and clothes prices pushed inflation up in March, official data showed yesterday, reversing the recent downward trend and raising fears that consumers will be squeezed for even longer than expected.
Consumer prices rose 3.5 per cent in the year to March, up from 3.4 per cent in February and defying predictions of rapidly falling inflation.
Food price inflation accelerated, jumping from 3.3 per cent in the year to February to 4.6 per cent in the year to March, while clothing inflation also rose sharply, up from 2.6 per cent to 3.7 per cent.
The cost of living rose 3.6 per cent, down from 3.7 per cent in February, while core inflation – which strips out volatile food, energy, tobacco and alcohol prices – rose once more to 2.5 per cent from 2.4 per cent.
“The shock is not just coming from the usual suspects of food and energy – it is possible that underlying inflationary pressures are a little bit stronger than many were thinking they would be a few months ago,” warned BNP Paribas’ David Tinsley.
“There remain risks from food prices given the drought affecting the UK and parts of Europe, as well as the opportunity retailers may get to push up prices over the busy period of the Olympics.”
That outlook could embarrass the Bank of England – it had justified increasing its quantitative easing programme last year by forecasting a sharp fall in inflation into 2012.
Inflation was last below the two per cent target in November 2009.
Meanwhile Eurostat revised up its March inflation reading for the Eurozone to 2.7 per cent.