Inflation steady as lower air fares offset higher food and clothing prices

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Inflation was unchanged in March as a jump in the cost of food and clothing was offset by falling flight prices.

The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measure of inflation stood at 2.3% last month, unchanged from February's reading and in line with expectations.

The cost of living remains above the Bank of England's 2% target, putting pressure on the Bank's Monetary Policy Committee (MPC) to hike interest rates beyond 0.25% this year.

ONS deputy national statistician Jonathan Athow said: "Food, drink and clothing prices all rose in March.

"However, this is offset by air fares, which fell slightly but last year rose substantially thanks to the timing of Easter.

"The costs of raw materials and the price of manufactured goods leaving factories were both little changed, as falling fuel prices helped stem further rises."

 

 

The main downward pressure on the cost of living came from air fares, which fell by 3.9% between February and March after jumping by 22.9% last year.

The move was driven by the timing of Easter, with Easter Sunday falling on March 27 in 2016 and on April 16 this year. The cost of flying soars around the Easter holiday period.

Fuel pump prices were also dragging on CPI. Petrol dropped by 1p to 119.2p per litre between February and March and diesel fell by 1.1p to 122.1p per litre over the period.

Clothing and footwear price tags were also on the rise last month, climbing by 2% between February and March in contrast to a 1% climb last year.

The largest upward impact came from food and non-alcoholic beverages, climbing 0.4% between February and March after falling 0.6% over the same period in 2016.

The jump was driven at large by rising price tags for margarine and crisps.

On the hike in food prices, the ONS said: "For the past two years, the price changes for food in the UK remained well below the other countries.

"This could be partly due to the supermarket price wars in the UK over this period which resulted in a downward pressure on food prices.

"However, all countries are now seeing an increase in food prices as a result of the upward trend in global food prices."

The Consumer Price Index including owner occupiers' housing costs (CPIH) also hit 2.3% in March, the same rate as February's reading.

CPIH is the ONS's preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.

The Retail Price Index (RPI), a separate measure of inflation which includes council tax and mortgage interest payments, fell to 3.1% in March, down from 3.2% in February.