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UK inflation rate rises to 3.4% UK inflation rate rises to 3.4%
(31 minutes later)
The UK inflation rate rose sharply to 3.4% in March from 3% the month before, official figures have shown.The UK inflation rate rose sharply to 3.4% in March from 3% the month before, official figures have shown.
The rise in the Consumer Prices Index (CPI) inflation rate was greater than analysts had expected.The rise in the Consumer Prices Index (CPI) inflation rate was greater than analysts had expected.
Retail Prices Index (RPI) inflation, which includes housing costs, also rose sharply to 4.4% in March from 3.7%.Retail Prices Index (RPI) inflation, which includes housing costs, also rose sharply to 4.4% in March from 3.7%.
The CPI inflation rate is the measure targeted by Bank of England interest-rate setters, while RPI is often used as a benchmark in wage negotiations.The CPI inflation rate is the measure targeted by Bank of England interest-rate setters, while RPI is often used as a benchmark in wage negotiations.
Increasing petrol prices were an important factor in rising consumer prices, the Office for National Statistics said. Higher air fares
Higher petrol prices were an important factor in rising consumer prices, the Office for National Statistics (ONS)said.
Petrol prices have been rising because of the relative strength of the dollar and higher refining costs, as well as the increasing price of oil.Petrol prices have been rising because of the relative strength of the dollar and higher refining costs, as well as the increasing price of oil.
The continuing impact of the rise in VAT, which went back up to 17.5% in January, and the effect of flat gas bills relative to this time last year, when they fell sharply, also contributed to the spike in inflation.The continuing impact of the rise in VAT, which went back up to 17.5% in January, and the effect of flat gas bills relative to this time last year, when they fell sharply, also contributed to the spike in inflation.
Analysts expect the rise in prices to be temporary. The ONS said increasing air fares, especially on European flights, rising food and non-alcoholic drinks prices, and higher clothing and footwear costs also played a part.
However, if the CPI inflation rate remains above 3% in April, the governor of the Bank of England, Mervyn King, will have to write another letter of explanation to the chancellor. Offsetting these were falls in the prices of second-hand cars, furniture and household equipment.
Low rates
Despite the sharp rise in prices, analysts expect the rate of inflation to fall again in the coming months, as weak economic growth and high unemployment dampen price rises.
The governor of the Bank of England, Mervyn King, has said that he is not concerned about inflation in the medium term, and will continue to keep interest rates low to stimulate growth.
UK interest rates have been at the record low of 0.5% for 13 consecutive months.
However, if the CPI inflation rate remains above 3% in April, Mr King will have to write another letter of explanation to the chancellor.