UK Inflation Rate at 15-Month High


Consumer prices in the United Kingdom went up 0.5 percent year-on-year in March of 2016, following a 0.3 percent rise in the previous two months and compared to market expectations of a 0.4 percent increase. It is the highest inflation rate since December of 2014, due to rising cost for housing and utilities, restaurants and hotels and clothing and footwear while transport fell at a slower pace.

Year-on-year, the biggest upward pressure came from cost of housing and utilities (up 0.4 percent from 0.3 percent in the previous month), followed by restaurants and hotels (up 2.1 percent from 1.9 percent), miscellaneous goods and services (up 1.0 percent from 1.2 percent) and clothing and footwear (up 1.4 percent from 0.3 percent). In contrast, transport prices fell at a slower pace (down 0.1 percent from -1.1 percent in February) while deflation in recreation and culture (down 0.2 percent from -0.1 percent) and food and non-alcoholic beverages (down 2.7 percent from -2.3 percent) worsened. 

On a monthly basis, consumer prices were up 0.4 percent, the fastest pace since August of 2014. The biggest upward pressure came from transport cost (up 1.7 percent), mainly due to air transport where the timing of Easter contributed to fares rising by 22.9 percent. Prices of clothing and footwear rose 1 percent, mainly due to women’s outerwear and cost of restaurants and hotels increased 0.5 percent. In contrast, main downward contribution to the CPI came from food and non-alcoholic beverages, with prices falling 0.6 percent, most notably vegetables.

Annual core inflation rate which strips out increases in energy, food, alcohol and tobacco came in at 1.5 percent, up from 1.2 percent in the previous two months and the highest since October of 2014.

ONS | Joana Taborda | joana.taborda@tradingeconomics.com
4/12/2016 9:54:18 AM