U.K. Inflation Rate Drops to 4% in March


UK annual inflation – the Government’s target measure – was 4.0 per cent in March, down from 4.4 per cent in February.

By far the largest downward pressure to the change in CPI inflation came from food and non-alcoholic beverages where prices, overall, fell by 1.4 per cent between February and March this year compared with a rise of 0.3 per cent between the same two months a year ago. The 1.4 per cent this year was a record fall for a February to March period.

The downward effects were widespread and reflected supermarket led sales this year. The most notable contributions came from fruit where prices fell by 4.7 per cent this year (also a record February to March movement) but rose by 0.7 per cent a year ago, and bread and cereals where prices fell by a record 2.6 per cent this year compared with a fall of 0.2 per cent a year ago.

There were also large downward pressures from: recreation and culture, principally from games, toys and hobbies (particularly computer games), recording media and data processing equipment, air transport, where fares rose by less than a year ago, particularly on European routes

The largest upward pressures to the change in CPI inflation came from: housing and household services: prices, overall, rose by 0.4 per cent between February and March this year compared with 0.1 per cent between the same two months a year ago. The main upward effect came from domestic heating costs where average electricity and gas bills rose this year but were unchanged a year ago; purchase of vehicles, where prices rose this year but fell a year ago, particularly for second-hand cars

In the year to March, RPI annual inflation was 5.3 per cent, down from 5.5 per cent in February. The main factors affecting the CPI also affected the RPI.

RPIX annual inflation – the all items RPI excluding mortgage interest payments – was 5.4 per cent in March, down from 5.5 per cent in February.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in February was above the provisional figure for the European Union. The UK rate was 4.4 per cent whereas the EU’s as a whole was 2.8 per cent.


TradingEconomics.com, UK Office for National Statistics
4/12/2011 10:04:00 AM