-Capital Economics
UK consumer price inflation jumped to 15-month high, rising to 0.5% from previous 0.3% this month, according to the Office for National Statistics. The reason for such an increase was a rise in the cost of air fares over Easter and more expensive spring and summer clothing ranges hitting stores. Air fares advanced 22.9% month-on-month this March, compared with increase of 2.7% in March 2015. Meanwhile, City analysts were surprised to see such a data release, since they had expected inflation to stay near zero or climb to 0.4%. However, other analysts emphasised that the longest periods of low inflation in a generation is likely to come to an end over the coming months, since higher petrol and import prices along with the rising average wages from the low Pound fed into the figures.
In addition to that, an unexpected increase in the UK CPI is likely to effect on the Bank of England's decision on its monetary policy. The central bank is widely expected to keep its policy rate unchanged at 0.5% on Thursday's monetary meeting, but some analysts say the recent firming of inflation is laying the groundwork for tightening in the months ahead. In the meantime, very important data on core inflation performance showed the measure rose to 1.5% in annual terms. This increase is to further put a pressure on the BoE policy monetary policy decision.
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