Tuesday, April 20, 2010
Inflation jumps back up to 3.4%
Posted by David Smith at 12:00 PM
Category: Thoughts and responses

A little uncertainty has been creeping into the Bank of England's view that inflation will head down sharply later in the year and the March numbers will have done nothing to ease it. Admittedly, having to compete with a record 1% fall in the consumer prices index between February and March last year meant that the base effect challenge was huge. Even so, 3.4% consumer price inflation, up from 3%, was worse than expected.

RPI inflation rose from 3.7% to 4.4%. Most dramatic of all was RPIX inflation, up from 4.2% to 4.8%. This measure, excluding mortgage interest payments, used to be the basis of the official target, of 2.5%, so inflation on this measure is almost double its old target.

Inflation on all measures should still fall back in the second half but the March figures mean the starting point for the fall is higher than it might have been. More here.