UK Inflation Remains at 2.3%

Inflation in the UK has remained at 2.3% for the second month in a row, above the Government target of 2%

Emma Wall 11 April, 2017 | 12:13PM
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Inflation held steady at 2.3% in March for the second month in a row, in line with expectations. This is the highest level since September 2013, data from the Office for National Statistics showed.

The consumer price index including owner occupiers' housing costs also climbed 2.3% in March. On a monthly basis, consumer prices rose 0.4%, slightly faster than the expected 0.3%. Excluding prices of energy, food, alcoholic beverages and tobacco, core inflation eased to 1.8% from 2% - showing that the price of oil rising over the past 12 months is putting a strain on households. Food inflation increased significantly last month, as supermarkets passed on rising import costs to consumers.

Another report from ONS showed that factory gate inflation slowed slightly in March. Output prices grew 3.6% annually, following a 3.7% rise in February. This was the ninth consecutive annual growth in prices.

Calum Bennie, savings specialist at Scottish Friendly, commented: “While UK consumers will be relieved that inflation has not risen over the last month, such relief will be short lived as prices are likely to rise further over the year as imported goods will cost more.”

Inflation Higher for Baby Boomers

Consumers aged between 50 and 64 experienced a higher level of inflation, according to the Aviva Age Inflation Index. For the first time since September 2013, price inflation across all groups exceeds the government’s target of 2%. The fall in the value of the pound and rising oil prices have contributed to rising consumer prices over the past year.

Alistair McQueen, Head of Savings & Retirement at Aviva, said:  

“Inflation is back for all ages. This time last year price inflation was below 1% for all ages and for those in retirement it was nearly non-existent. This is no longer the case. Price inflation for all ages now exceeds the government’s target of 2%.

“All eyes now turn to tomorrow’s wage inflation figures. The data may show that prices are rising faster than wages for the first time since 2014 – placing a further strain on our household finances. We already know that household savings are at an all-time low and household net borrowing is at levels not seen since 2006. More strain is not welcome.”

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About Author

Emma Wall  is former Senior International Editor for Morningstar