This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.
You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/8631532.stm
The article has changed 10 times. There is an RSS feed of changes available.
Version 5 | Version 6 |
---|---|
UK inflation rate rises to 3.4% | UK inflation rate rises to 3.4% |
(20 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. |
Higher air fares | Higher air fares |
Higher petrol prices were an important factor in rising consumer prices, the Office for National Statistics (ONS) said. | 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 price of oil hit 18-month highs at the start of April. | The price of oil hit 18-month highs at the start of April. |
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. |
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. | 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. |
Offsetting these were falls in the prices of second-hand cars, furniture and household equipment. | Offsetting these were falls in the prices of second-hand cars, furniture and household equipment. |
Low rates | 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. | 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 expects inflation to fall back towards the target rate of 2% in the coming months. | The governor of the Bank of England, Mervyn King, has said that he expects inflation to fall back towards the target rate of 2% in the coming months. |
Analysts therefore expect the Bank to keep interest rates low to stimulate growth. However, if inflation continues to rise sharply, the Bank's Monetary Policy Committee may have to raise rates. | |
UK interest rates have been at the record low of 0.5% for 13 consecutive months. | UK interest rates have been at the record low of 0.5% for 13 consecutive months. |
The policy helped to bring the UK economy out of recession in the last quarter of 2009, when it grew by 0.4%. | The policy helped to bring the UK economy out of recession in the last quarter of 2009, when it grew by 0.4%. |
However, if the CPI inflation rate remains above 3% in April, Mr King will have to write another letter of explanation to the chancellor. | However, if the CPI inflation rate remains above 3% in April, Mr King will have to write another letter of explanation to the chancellor. |