UK inflation rises to 0.7% in March

The ONS said the monthly rate is also higher in March 2021 than March 2020 principally because of price movements for motor fuels and clothing

Rising fuel, clothing and transport helped UK inflation rise to 0.7% in the 12 months to March, up from 0.4% recorded in February.

The latest figures from the Office for National Statistics (ONS) revealed that the largest upward contribution to the CPIH 12-month inflation rate came from transport (0.44 percentage points).

Within transport, the ONS said movements have been caused by changes in the price of motor fuels. Between March 2020 and February 2021, motor fuels made a downward contribution to the CPIH 12-month rate. However, the contribution turned positive in March 2021 reflecting a 12-month rate for motor fuels of 3.5%, the first positive rate since February 2020.

The ONS said the monthly rate was also higher in March 2021 than March 2020 principally because of price movements for motor fuels and clothing. Prices for these goods rose between February and March 2021, compared with a fall between the same two months a year ago.

These were all partially offset by falls in the price of food. The contribution from food and non-alcoholic beverages to the headline rate was also downward, for the fifth month in succession, reflecting a fall in overall prices of 1.4% in the year to March.

Commenting on the figures ONS deputy national statistician Jonathan Athow said: “The rate of inflation increased with petrol prices rising and clothes recovering from the falls seen in February.

“However, food prices fell back on the year, as prices of some staples were lower than at the start of the pandemic.”

Debapratim De, senior economist at Deloitte, added: “Although March’s inflation figures were driven primarily by price rises in fuels and clothing, a broad-based pickup is likely over the summer months, as activity snaps back. However, economic slack and rises in unemployment should limit inflationary pressures, maintaining the Bank of England’s supportive policy stance.”

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