UK inflation rose to by 0.1% last month, according to two different indexes. The Consumer Price Index (CPI) reporting an increase from 3.4 to 3.5% and the Retail Price Index (RPI), an alternative measure of inflation, dipped increasing from to 3.6% to 3.7% for March 2012. These figures will heap further pressure on already hard-pressed households.
The recent rise brings to a halt a five month run of declines, where inflation has dropped from a high of 5.2% in September 2011.
Households were squeezed by high prices and pay freezes throughout 2011 and analysts predicted some relief from the high cost of living this year in 2012. However, this halt in the decrease of inflation is thought to be temporary.
It is predicted that inflation will fall again as last year’s rises in energy prices start to fall out in comparison to last year and economic recovery continues.
This rise in inflation though come as a concern to Bank of England policymakers, who had forecast that inflation would fall rapidly throughout 2012 and 2013. It currently remains well above their target of 2%, reinforcing expectations that the central bank will not inject more cash into the economy next month as part of its quantitative easing programme.
The Office for National Statistics (ONS) has also stated that clothing and food prices were the biggest drivers for inflation last month. Essential food items such as fruit, bread and cereals and meat also saw prices increases in March, as compared to the previous year, which acted as a drag on the overall food category.
Despite fuel prices hitting record highs, the ONS said this had no impact on the rise in inflation since petrol and diesel also rose by similar amounts the previous March.
A spokesman for the Treasury is quoted as saying that “Inflation has fallen by a third since September…most market commentators expect inflation to continue falling later this year, providing ongoing relief for family budgets.”