Inflation holds steady but outlook clouded

Inflation was unchanged last month, official figures have revealed, after lower food prices offset higher fuel costs at the pumps.

Inflation was unchanged despite higher fuel costs at the pumps. Picture: PA

Figures from the Office for National Statistics (ONS) show the consumer prices index was flat at 1.9 per cent in March, matching February’s rate.

March inflation missed economists’ expectations of 2 per cent, which would have put it squarely in line with the Bank of England’s target.

Ben Brettell, senior economist at Hargreaves Lansdow, said: “All the key UK inflation measures came in slightly lower than economists expected in March, highlighting the absence of inflationary pressures in the domestic economy.

“This makes the Bank of England’s job somewhat easier, as there’s no pressure to raise rates as it grapples with continued uncertainty over Brexit.

“Meanwhile annual UK house price growth slowed to 0.6 per cent in February, the lowest annual rate in seven years.

“London prices fell 3.8 per cent, their largest annual fall since August 2009 in the immediate aftermath of the financial crisis. This follows efforts by policymakers to cut down on riskier mortgage lending, though clearly uncertainty over Brexit will have played a large part in the capital’s faltering housing market.”

Suren Thiru, head of economics at the British Chambers of Commerce, said: “It remains probable that UK inflation will drift moderately higher in the coming months, with firms reporting that the pressure to raise prices remains significant.

“Businesses say they are struggling to absorb the high cost of imported raw materials amid tightening cashflow – a task made more difficult by the raft of extra upfront costs imposed on firms at the start of the new tax year. Higher energy bills are also likely to add to the upward pressure on consumer prices.”