Inflation touches 15-month high

Consumer inflation has hit its highest level for 15 months as the rising cost of clothes and air fares pushed up the cost of living, new figures have revealed.

Howard Archer, chief UK economist at IHS Global Insight, says consumer price inflation is expected to trend gradually upwards over the coming months.

The Office for National Statistics (ONS) said the consumer price index measure of inflation rose to 0.5 per cent last month, from 0.3 per cent in February, after the price of clothes nudged up 1.7 per cent year-on-year, while passenger transport by air jumped 17.9 per cent over the same period.

The cost of flights soared 22.9 per cent month-on-month, as the measure was impacted by the early Easter timing.

However, food prices fell 3 per cent year-on-year in March as grocers continue to slash prices amid the ongoing supermarket price war.

Despite the rise, inflation still remains historically low, with the Bank of England predicting it to stay far below target of 2 per cent for some time.

ONS statistician Phil Gooding said: “After an unprecedented period of CPI being close to zero, inflation has begun to rise again.

“Dearer clothing and higher air fares, influenced by the timing of Easter, are behind the rise in CPI, which is still low by historic standards.”

Howard Archer, chief European and UK economist at IHS Global Insight, said: “Consumer price inflation may well edge back in April due to a correction from March’s Easter-related price increase, although much will depend on what happens with petrol prices which have risen recently amid a firming in oil prices.

“Notwithstanding a possible dip in April, consumer price inflation is expected to trend gradually upwards over the coming months.”

Ben Brettell, senior economist, Hargreaves Lansdown, added: “Naturally policymakers will need to remain mindful of the risk that inflation overshoots at some point.

“However, the UK economy is battling a number of significant headwinds at present. Consumer spending, aided by low inflation, low unemployment and rising wages, has been the engine of economic growth lately.

“But recent surveys suggest consumers reined in their spending in March – perhaps the first sign of nerves ahead of June’s EU referendum.

“All in all, the economic picture remains highly uncertain and I expect no action from Threadneedle Street for some time yet.”