You are here: Home - Saving & Banking - News -

Inflation remains unchanged at 2.3% in March

0
Written by: Paloma Kubiak
11/04/2017
UK inflation remained steady at 2.3% in March, exceeding the Bank of England’s target for the second month in a row, according to official figures.

Rising prices of food, alcohol, tobacco and clothing were offset by falling air fares and petrol costs, according to the Office for National Statistics (ONS).

The inflation rate is the highest since September 2013. It is the second consecutive month the rate has exceeded the Bank of England’s 2% inflation target.

This is also the second inflation report to use CPIH instead of CPI as a measure of how much prices are rising. The new measure includes costs associated with owning, maintaining and living in your own home, and council tax. However, CPI also remained stable at 2.3% in March.

Maike Currie, investment director for personal investing at Fidelity International, said the Easter break falling later this year compared to 2016 kept price rises in check but that the ‘Easter effect’ will kick in this April, so inflation will likely rise when figures are released next month.

She noted that retail sales figures from the British Retail Consortium, released overnight, showed that the rise in inflation is starting to bite, with non-food high street sales suffering the worst fall in nearly six years.

“With price rises outstripping wages, we are getting progressively poorer each month,” she said.

Currie said that unsurprisingly, consumers are choosing to focus their spending on essential items like food and fuel.

‘Inflationary squeeze is coming’

Laith Khalaf, senior analyst at Hargreaves Lansdown, said inflation outpacing wages and interest rates spells trouble for households and cash savers.

He said: “The inflationary squeeze that’s coming is going to mean consumers have to spend more at the check outs and petrol pumps, and that reduces their capacity to fund discretionary spending. It also reduces people’s propensity to save, which is particularly worrying at a time when the UK’s savings ratio is at its lowest level since the 1960s, and retirement is costlier than ever because of gains in life expectancy.”

He said that in March, food inflation really took off, which suggests supermarkets are starting to pass rising import costs onto consumers.

“The inflation we have got at the moment is a bit peculiar, and is actually disinflationary because it stems from a weaker currency and higher commodity prices, without an accompanying rise in UK wages so far.

“So if you’re looking for clues as to when the Bank of England might raise interest rates, right now you might as well look at pay growth or consumer spending as CPI, because that is what the central bank is monitoring for signs of inflation in the underlying economy.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
piggy-bank
Government-backed 3-year bond paying 2.2% launches

The highly-anticipated government-backed savings bond paying 2.2% for three years has launched today.

Close