Inflation predicted to have risen in March amid higher fuel prices

Inflation is expected to have edged up in March, as drivers face higher costs at the pumps.

Consensus estimates predict Office for National Statistics (ONS) figures will reveal on Wednesday that the Consumer Prices Index (CPI) rate of inflation was up at 2% last month.

The recovery in oil prices and firmer food prices are both expected to push the rate higher than February, when it came in at 1.9%.

The rise will put the rate squarely on the Bank of England’s 2% inflation target.

Analysts at Oxford Economics said the recent inflation trend had been broadly stable.

“We expect March to have delivered a further tick-up in CPI inflation to 2%, reflecting upward pressure from petrol prices. While prices at the pumps dropped 1.4% between February and March 2018, they rose 1% in the same period this year,” they said.

Fuel prices have risen on the back of the recovering oil price, which was bolstered by supply concerns due to conflict in Libya and sanctions on Venezuela.

Samuel Tombs, chief economist at Pantheon Macroeconomics, said the contrast with last year’s dire weather conditions could also help boost inflation.

Businesses such as Dunelm and Topps Tiles have already reported improved trading due to the better weather in March, compared with last year’s Beast from the East.

“The snowstorms at the beginning of March 2018 meant that price rises for clothing and for road and sea transportation were unusually small, due to weak demand,” said Mr Tombs.

He added that inflation was likely to remain steady throughout the year, though would likely rise in April due to the timing of Easter and the energy price cap increase.

“Accordingly, we expect CPI inflation to be at or above the 2% target in all but two of the remaining months this year,” he said.

However, the originally planned timing of Brexit was likely to have affected spending last month.

Michael Hewson, chief market analyst at CMC Markets UK, said: “Consumers appear to have slowed down their spending ahead of last month’s March 29 Brexit deadline, if recent other third party surveys have been any indication.

“Any sharp slowdown in the March numbers is likely to rebound in April after the latest Brexit deadline was extended until October as UK consumers book their summer breaks, unencumbered from concerns about a Brexit summer cut-off.”