CPI inflation rises to highest level since 2014 following hike in air fares
Inflation as measured by the Consumer Prices Index (CPI) rose to 0.5% in March, according to figures from the Office for National Statistics (ONS), up from a level of 0.3% in February. Currently, inflation is at its highest level since December 2014.
A statement from the ONS said: ‘Rises in air fares and clothing prices were the main contributors to the increase in the rate between February and March 2016.
‘[However,] these upward pressures were partially offset by a fall in food prices and a smaller rise in petrol prices than a year ago.’
CPI inflation has increased gradually since October 2015, but the rate of 0.5% is still well below the Bank of England’s official target of 2%. Few economists expect to see the Bank raise interest rates in the immediate future.
Howard Archer, chief UK and European economist at IHS Global Insight, said: ‘Despite the rise in consumer price inflation to a 15-month high of 0.5% in March, any interest rate hike is likely to remain off the table for some considerable time to come.
‘Consumer price inflation is still substantially below its 2% target rate, the UK economy is stuttering, earnings growth is muted and domestic and global economic uncertainties are high.’
Under the separate Retail Prices Index (RPI) measure, which includes housing costs, inflation was 1.6% in March, up from a level of 1.3% in February.