-David Tinsley, an economist at UBS AG
British inflation remained at its all-time low in March, as gas prices continued to weigh on cost of living in the UK, while prices for clothes and shoes broke with the usual pattern. According to the Office for National Statistics, the UK's inflation stayed at 0% for the second consecutive month in March, marking the lowest level since records began in late 1980s. Clothing prices fell 0.1% between February and March, the first time in the history of the consumer price index that clothing has declined during this period. The sharp fall in inflation has been caused by the precipitous decline in oil prices, as well as drops in food prices. However, core measure of inflation, which strips out volatile energy, food, alcohol and tobacco, slid to the lowest level in nearly nine years at 1.0% in March compared with 1.2% in February.
A separate report showed input prices rose between February and March, beating expectations for a fall into deflation. UK input price index increased 0.3%, up from the 0.1% rise a month earlier, and considerably above the median estimate of a 0.4% monthly drop, the Office for National Statistics reported. The index was driven up by a 4.3% rebound in crude oil prices between February and March. Meanwhile, the UK house price inflation cooled in February to 7.2%, compared with the 8.4% reading in January.
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