UK inflation rose to 7 per cent, hitting a fresh 30-year high after fuel prices surged and raising pressure on the Bank of England to increase interest rates again.
Consumer prices increased at an annual rate of 7 per cent last month, up from 6.2 per cent in February and well above the 0.7 per cent recorded in March 2021, according to data published by the Office for National Statistics on Wednesday.
The reading was above the 6.7 per cent forecast by economists polled by Reuters, and the highest level since March 1992, when it reached 7.1 per cent.
Inflation in March was more than three times the Bank of England’s target of 2 per cent, and higher than the rate of “around 6 per cent” that it forecast at its last meeting. The BoE said it expected inflation to climb to 8 per cent in April and possibly to rise further in the autumn following the increase in energy price cap set by the regulator.
Core inflation, which excludes volatile items such as energy, food, alcohol and tobacco, rose to 5.7 per cent in March, up from 0.9 per cent in the same period last year and above analysts’ expectations
Grant Fitzner, ONS chief economist, said: “Broad-based price rises saw annual inflation increase sharply again in March. Amongst the largest increases were petrol costs, with prices mostly collected before the recent cut in fuel duty, and furniture.
“Restaurants and hotel prices also rose steeply in March while, after falling a year ago, there were rises across a number of different types of food,” he added.
Rising consumer prices erode what households can buy with their money and official statistics predicted that UK household real income this year would contract at the sharpest rate since records began in the 1950s.
March’s reading is the last inflation report before the next BoE monetary policy decision on May 5. George Buckley, economist at Nomura, expects interest rates to rise in May, August and November, taking the bank rate from its current 0.75 per cent to 1.50 per cent by the end of the year.
On Tuesday, US inflation came in at 8.5 per cent in March, the highest rate since 1981.