Inflation has remained below the Bank of England’s 2% target in March, giving consumers some unexpected relief.
Consumer prices rose at an annual rate of 1.9% last month, the same rate as in February, according to figures released by the Office for National Statistics.
ONS statistician Mike Hardie said: “Inflation is stable, with motor fuel prices rising between February and March this year, offset by falls in food prices as well as the cost of computer games growing more slowly than it did this time last year.”
Among the rises was fuel, with average petrol prices up by 1.2p per litre and average diesel prices up 1.4p per litre.
The price of games, toys and hobbies rose 1% but this was slower than the 3% rise seen in March last year.
A major reason for the slower rise in the price of food was a 1.4% fall in the price of oils and fats during March, compared with last year’s 6.7% rise.
The Retail Prices Index, a separate measure of inflation, was unchanged from February at 2.4%.
The figures come a day after data showing unemployment fell to 1.34 million (3.9%), and will go some way towards easing Brexit uncertainty.
They may also help the Bank of England to justify not raising interest rates in the near future.
The Bank had said it wants to see evidence of building inflation pressure before voting to raise interest rates. Wednesday’s inflation figures are unlikely to provide this.
Nish Parekh, managing director of market risk solutions at Silicon Valley Bank, said the figures would provide “breathing space” for the Bank of England.
But she added: “Despite recent economic indicators trying their best to stimulate markets, there remains a distinct lack of conviction in sterling and volatility will likely remain subdued as participants remain in wait-and-see mode as Brexit unfolds.”
Tej Parikh, senior economist at the Institute of Directors, said the stability in the cost of living was an “unexpected plus for the economy” but was unlikely to remain.
He said: “With the rise in wages and firms reporting higher costs, we are likely to see upward pressure on prices over the coming months…although salaries have been increasing, in real terms people’s earnings remain below pre-crisis levels.”
Howard Archer, chief economic adviser at EY ITEM Club, said: “Consumers have generally been the most resilient part of the economy and they have been helped by real earnings growth climbing to 1.6% in the three months to February, which was the best level since mid-2016.
“However, it is questionable whether this improvement in earnings growth can continue as, while it was stable at a decade high of 3.5% in the three months to February, it dipped to a five-month low of 3.2% in February itself.”
(c) Sky News 2019: Relief for consumers as inflation remains stable