‘The recent run of escalating inflation may have paused for now, but that has more to do with the timing of Easter than any change in the strong upward pressure on prices.’ – Stephen Clarke, Resolution Foundation
British inflation remained unchanged in March compared to the prior month due to this year’s later Easter and a slight fall in oil prices. The Office for National Statistics reported on Tuesday consumer prices rose 2.3% on an annualised basis last month, while market analysts anticipated a 2.2% increase. The sharp fall in the value of the British Pound paired with the recent rebound in oil prices boosted inflation across Britain. Furthermore, a combination of subdued wage growth and surging inflation started putting significant pressure on households’ pockets, raising concerns over growth prospects as consumer spending accounts for about 60% of the British economy. Tuesday’s data also showed that food prices climbed 1.2% on an annualised basis in March, the largest gain since 2014. However, the Bank of England said at its latest monetary policy meeting that there was no rush to raise interest rates and it was prepared to tolerate inflation above the 2% target. The main driver behind March’s unchanged reading was a drop in airfares, which, in turn, was triggered by the later timing of this year’s Easter holidays. Analysts suggest that consumer prices will continue surging until inflation hits 3% due to the weak Sterling and higher oil prices.
