UK Inflation Rate Rises

Posted on by Watson Buckle Accountants in Bradford

The inflation rate within the UK rose during March, as a result of higher food and clothing prices, reinforcing expectations that the Bank of England will not provide further stimulus for the economy.

According to the Office for National Statistics, the Consumer Price Index (CPI) rose from 3.4 percent in February to 3.5 percent last month, with the slight increase putting a halt on the five-month run of declines, which has seen the CPI inflation rate fall from its peak of 5.2 percent in September 2011.

The Office for National Statistics have attributed the rise in inflation to the rise in food and clothing prices, with supermarkets last year during February and March heavily discounting, which saw food prices fall by a record 1.5 percent during February and March 2011 – this year, the prices have only fallen by 0.3 percent.

An increase in inflation will heighten the concerns of the Bank of England policy makers, who have recently expressed concerns that the inflation rate may not fall as much as hoped; and have also indicated a reluctance to sanction another bout of quantitative easing when the current programme is complete in May.

More worryingly for the Bank of England, is that the core consumer price inflation, which strips out the volatile food, energy, tobacco and alcohol components – increased slightly to 2.5 percent.

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