–Mar CPI +0.3% m/m; +3.5% y/y vs Feb 3.4% y/y; Above Median Forecast

LONDON (MNI) – Consumer price inflation rose for the first time in
six months in March boosted by higher prices for food and clothing,
figures released by National Statistics showed Tuesday.

The rise in inflation was unexpected and puts the rate for the
first quarter a little above the latest forecast from the Bank of
England made in February. While inflation should continue to ease over
the coming months some Monetary Policy Committee members have aired
their concerns that inflation won’t ease as quickly as forecast and
these figures add some weight to their view.

Consumer prices rose 0.3% on the month in March and were up 3.5% on
the year, compared with 3.4% in February, the first rise in inflation
since September 2011. The outturn was only marginally above the median
forecast as analysts had predicted a rise of 0.3% on the month but a
3.4% rise on the year.

Today’s figures mean that CPI inflation stood at 3.5% in the first
quarter, a little above the 3.35% central projection in the Bank
of England’s February Inflation Report.

The main upward impact in March came from food and non-alcoholic
drink prices which fell 0.5% on the month this year, compared with a
1.4% fall in the same month a year earlier when supermarkets discounted
heavily. There was upward pressure from fruit, bread and cereals and
meat.

Clothing and footwear also added to the latest rise in inflation
with prices up 2.2% on the month compared with an increase of 1.1% in
March 2011. Recreation and culture also added to inflation.

The main significant downward impact came from electricity and gas
as prices fell in March this year.

Stripping out energy, food, alcoholic beverages and tobacco, core
inflation also ticked up to 2.5% in March from 2.4% in February, the
first rise since October 2011.

The Retail Prices Index rose 0.4% on the month and was up 3.6% on
the year, in line with the median forecast.

Excluding mortgage interest payments, RPIX was up 0.4% on the month
and 3.7% on the year, also in line with the median forecast.

–London bureau: 0044 20 7862 7491; email: puglow@marketnews.com

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