Clothing and fuel costs driving up inflation

Fuel price rises and an increase in clothes costs has driven up inflation, according to new figures.

New data from the Office of National Statistics (ONS) show the rate of inflation rose in March – but remained below expectations.

The ONS said the Consumer Prices Index (CPI) hit 0.7% in March – following a 0.4% reading in February and 0.7% in January.

Inflation unexpectedly eased in February, in part because of the biggest annual fall in clothing and footwear costs.

Discounting, which had been commonplace in February, eased in March, the ONS said, however it was still unseasonably high.

ONS deputy national statistician for economic statistics Jonathan Athow, said: "The rate of inflation increased with petrol prices rising and clothes recovering from the falls seen in February. However, food prices fell back on the year, as prices of some staples were lower than at the start of the pandemic."

The price of petrol hit 123.7 pence per litre in March – up from 119.4.

Inflation is expected to increase this year, as the UK and other countries around the world emerge from the pandemic, with the Bank of England forecasting it reaching around 2% by the end of 2021.

Analysts had predicted that CPI would rise to 0.8% in March.

Several say the increase is unlikely to force the Bank of England to change its base rate, which informs the interest that mortgage borrowers pay.

Fuel prices over the next few months will be compared to the first lockdown – when the price was as low as 106.2p per litre.