UK’S rate of inflation rose in March but remained below levels expected

The UK’S rate of inflation rose in March, however it remained below expectations as the price of vehicle fuels and clothing rose.

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) hit 0.7% in March.

It comes after a 0.4% reading in February and 0.7% in January.

Inflation had unexpectedly eased in February, in part because of the biggest annual fall in clothing and footwear costs since 2009.

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

“The rate of inflation increased with petrol prices rising and clothes recovering from the falls seen in February,” said ONS deputy national statistician for economic statistics Jonathan Athow.

“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 2021, up from 119.4 pence per litre a year ago.

Inflation is expected to increase this year, as the UK and other countries around the world emerge from the pandemic.

Bank of England forecasts have inflation reaching around 2% by the end of 2021.

A consensus of analysts supplied by Pantheon Macroeconomics was that CPI would rise to 0.8% in March.

Pantheon’s chief UK economist, Samuel Tombs, believes that CPI will reach the Bank’s 2% target rate as early as May.

“CPI inflation looks set to jump to about 1.7% in April, driven primarily by a large semi-annual increase in electricity and natural gas prices, as well as the anniversary of the collapse in oil prices at the start of the pandemic,” he said.

“April’s data also will be collected after shops reopened and hospitality businesses resumed outdoor service, so the inflation rates for clothing and food service activities probably will both rise.”

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

“CPI inflation looks set to jump to about 1.7% in April