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Britain’s inflationary surge took a break last month as annual inflation stuck at its highest level since September 2013 at 2.3 per cent.
Official figures from the Office for National Statistics revealed prices were 0.4 per cent higher on the month, while year-on-year core inflation (stripping out food and energy prices) dipped to 1.8 per cent from 2 per cent in February.
CPIH – a measure of inflation which includes housing costs – was also unchanged at 2.3 per cent last month.
The figures were broadly in line with analysts expectations for the month after surging energy and food prices have pushed up the cost of the UK’s inflation basket to above the Bank of England’s 2 per cent target. The BoE expects weakness in the pound to drive inflation to 3 per cent over the next 12 months.
Ahead of the release, analysts were divided over the impact of rising global food costs on Britain’s cost of living. Economists at Barclays expected a March CPI reading of 2.6 per cent based on surging food costs, while analysts at RBC Capital Markets forecast a dip to 2.2 per cent.
Breaking down the figures, the ONS said higher food and clothing prices were offset by a slight decline in air fares in March this year compared to last due to the later timing of Easter.
The UK’s inflation rate has surged since the Brexit vote, rising from 0.9 per cent a month after the EU referendum. The pound has fallen nearly 17 per cent against the dollar during that period.
“The full impact of sterling’s devaluation is still feeding through”, said Ian Kernohan, economist at Royal London Asset Management.
Sterling rose 0.25 per cent against the dollar on the release to $1.2437.