Early Easter eggs UK inflation higher

British inflation in March was at its fastest pace since December 2014. - Reuters

UK inflation accelerated to a 15-month high in March as an early Easter boosted air fares and clothing prices increased.
Consumer prices rose 0.5 per cent from a year earlier, the fastest pace since December 2014, the Office for National Statistics in London said on Tuesday. That exceeded the 0.4 per cent median estimate in a Bloomberg survey of economists. Core inflation, which excludes volatile food and energy prices, quickened to 1.5 per cent, the most since October 2014.
While inflation remains well below the Bank of England's two per cent target, the figures suggest it is picking up after almost a year of hovering around zero. Monetary Policy Committee officials are expected to keep the benchmark interest rate at a record low until the first quarter of 2017, the median forecast in a Bloomberg survey shows. Their latest decision will be announced tomorrow.
"They'll be encouraged inflation has picked up even if it's noisy," David Owen, an economist at Jefferies International, said in an interview on Bloomberg Television. Still, "it's going to be difficult for the MPC to raise rates. The first rate rise in the UK will probably be delayed into next year."
Air fares, clothing
Upward pressure on inflation last month came from transport costs as air fares rose 23 per cent on the month compared with 2.7 per cent in March 2015. This reflected the timing of the four-day Easter break, which occurred late last month but in early April 2015.
There was also pressure from clothing and footwear, which rose one per cent in March after falling in the same month last year.
This was partly offset by a drop in food prices, while motor-fuel costs rose by less than they did a year earlier.
Consumer prices rose 0.4 per cent in March from February. In the first quarter, they climbed 0.35 per cent from a year earlier, below the 0.44 per cent the BOE predicted in its latest forecasts in February. Services-cost inflation increased to 2.8 per cent in March on an annual basis, while goods prices fell 1.6 per cent on the year.
Another measure of inflation, the retail prices index, accelerated to 1.6 per cent, the most since December 2014, from 1.3 per cent in February. The index is used among other things to calculate interest-payments on inflation-protected gilts.