UK Inflation Rises

UK inflation rose from 0.3% in February to 0.5% in March, the Office for National Statistics has revealed, beating all expectations.

The Consumer Price Index (CPI) grew by 0.5%, this was lifted by rises in air fares and clothing prices, while economists were generally expecting a rise of 0.4%.

Meanwhile, the CPIH, which includes house prices, was up 0.7% in the year to March 2016, an increase from 0.6% in February.

Upward pressures were partially offset by a fall in food prices and a smaller rise in petrol prices than a year ago.

Sterling responded positively to the data, rising 0.5% against the US dollar to $1.43090. However, the FTSE 100 remained in the red, down 0.4% to 6,177 points in morning trading.

Inflation has slowly been increasing since October, despite no movement last month when it remained at 0.3%, the same level as the previous month and below economists’ expectations.

In January, UK inflation hit its highest level in 12 months, increasing by 0.3% year-on-year, but is still way off the Bank of England’s 2% target.

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