UK inflation fell unexpectedly last month to its lowest level in a year, casting doubt over whether the Bank of England will raise interest rates next month.
According to the Office for National Statistics (ONS), the 12-month growth rate of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) fell to 2.3% in March 2018, with the change driven mainly by the clothing and footwear, and alcoholic beverages and tobacco categories.
The 12-month growth rate in CPIH remained below the 12-month growth rate in average weekly earnings (AWE) nominal regular pay for the second consecutive month in February 2018.
Manufacturer factory gate prices for food have been growing more quickly than consumer food prices since mid-2016 but the growth rates have shown signs of converging since the beginning of 2018.
Commenting on today’s inflation figures, Office for National Statistics Head of Inflation Mike Hardie said: “Inflation fell to its lowest rate in a year, with women’s clothing prices rising slower than usual for this time of year.
“Alcohol and tobacco also helped ease inflation pressures, with tobacco duty rises linked to the Budget not appearing this March, thanks to its new autumn billing.
“Growth in the price of goods leaving factories continued to slow, due mainly to a smaller increase in the price of food products compared with this time last year.”