Inflation remained steady at 2.3 percent in March, its highest level in over three years.
The 2.3 percent figure is the same as that for February, according to the Office for National Statistics, despite warnings that it was set to increase. It is slightly higher than the Bank of England’s 2 percent target, but in line with the majority of analysts’ forecasts.
Food prices rose at their fastest pace for three years at 1.2 percent, with analysts warning that the rising costs of essentials such as groceries were already eating into households’ budgets. This corresponds with the latest retail figures, which suggest sales on the High Street are beginning to slow.
However, the rise in food products was largely offset by a downward effect from airfares, due to the timing of Easter.
The pound remained fairly steady in reaction to the figure, currently up 0.17 percent against the dollar and down 0.01 percent against the euro (1348GMT). Connor Campbell, analyst at Spreadex, said:
“While the pound was clearly disappointed that the CPI didn’t grow any further in March, the fact that it avoided the dip forecast by analysts meant the currency’s losses weren’t too pronounced.
“Though the pound didn’t have an aggressively sour reaction to the inflation figure, the fact that it didn’t move any higher was enough to lift the FTSE, which surged more than half a percent to hit a 3 week high.”