UK inflation rate falls to 4 per cent in March
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The UK Consumer Prices Index annual rate of inflation has fallen to 4 per cent, down from 4.4 per cent in February.
The Office for National Statistics said that food and drink costs had fallen in March, compared with February.
Retail Prices Index inflation also fell to 5.3 per cent from 5.5 per cent in February.
In February, Bank of England governor Mervyn King said inflation was likely to remain well above target for this year, before falling back in 2012, based on bank rate increases “in line with market expectations”.
He said: “Although one cannot be sure, prices excluding the effects of these factors would probably have increased at a rate well below the 2 per cent inflation target.
“Inflation is likely to continue to pick up to somewhere between 4 per cent and 5 per cent over the next few months.
Clear Currency head of foreign exchange Clive Lennox says: “The UK CPI has come in well below market expectations. Maybe we shouldn’t be that surprised, given that the Bank of England MPC members had knowledge of the inflation data prior to the interest rate decision last week. This goes someway to vindicate the MPC’s decision to leave the base on hold at 0.5 per cent. The mounting pressure to increase rates will subside for the moment, opening up a path for GBP to depreciate across the board.”
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Readers' comments (1)
John Harding | 13 Apr 2011 11:37 am
We still have talk all over the media that the MPC will increase interest rates in the very near future as if this is the answer to imported inflation. There are still going to be increases in world food and fuel prices regardless of what the UK does, we cannot affect these.
Domestically we already have signs of strain on household budgets and most of the government austerity measures are yet to bite.
World commodity prices will not be affected by what happens in the UK and there are constraints in demand yet to hit the economy so I am therefore yet to be convinced that rates need to rise.
It will depend on the projections for future growth, about which we are still unsure, so the B oE should hold off for some while yet.
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