U.K. inflation rate rose to 15 month high in March as Easter boosted prices.
United Kingdom consumer prices rose 0.5 percent from a year earlier, according to office for National Statistics report released in London on Tuesday. This exceeded 0.4 percent forecasted by economists.
Core inflation which excludes volatile food and energy prices surges to 1.5 percent, the most in 16 months.
Although inflation rose more than expected, the overall market outlook remains weak and below the Bank of England’s 2 percent target.
“Dearer clothing and higher air fares, influenced by the timing of Easter, are behind the rise in CPI, which is still low by historic standards,” said ONS statistician Phil Gooding.
The better than expected increase in inflation did not mean interest rates would rise sooner than forecast said Ben Brettell, a senior economist at Hargreaves Lansdown.
All nine members of the Bank’s Monetary Policy Committee (MPC) voted last month to keep rates at current 0.5% record low.
This means U.K economy received only a temporary boost due to Easter spending which spur increase in prices especially airfares and clothing. Even though its positive for the economy at the moment its uncertain if it can be sustained going forward. Hence, pound buyers should pay attention to possible change in momentum.
The pound rose after the data was released, gaining 0.3 percent to $1.4319 as at 10:15 a.m. London time.