Sun Shines On High Street As UK Inflation Cools To One-Year Low 13Apr

Sun Shines On High Street As UK Inflation Cools To One-Year Low

Latest figures from the Office for National Statistics (ONS) there is drop in inflation to 2.5% in March, coming in below both February’s inflation and analysts expectations of 2.7%.

Clothing prices began to slow significantly for the first time this year dropping to just 0.7% in March compared to 2% last year.

The largest upward pressure on inflation has been providing by clothing for most of the year to date, the relief is largely responsible for driving down overall rates.

Food price inflation also slowed seeing a 0.3% rise, dropped from 0.6% rise last year. This was largely driven down by fruit and fish falling 1.4% and 1.3% respectively.

“Inflation fell to its lowest rate in a year, with women’s clothing prices rising slower than usual for the first time this year,” ONS head of inflation Mike Hardie said.

Alcohol and tobacco also helped ease inflation pressures. Tobacco duty rises linked to the Budget not appearing this March thanking to the new autumn billing.

Growth in the price of goods leaving factories continued to slow and mainly due to the smaller increase in food products prices when compared this a year ago.

This comes after news that pay growth had accelerated to 2.8% yesterday which have provided good news for consumers.

As traders had been betting on an interest rates rise next month, the value of the pound fell on the news, however decreasing inflationary pressure makes this less likely.

Hargreaves Lansdown’s senior economist Ben Brettle said: “The interplay between wages and prices will be interesting over the coming months,”

As predicted inflation looks to be falling back but wages picking up and unemployment is still falling. It’s possible this tightness in the labour market could eventually push inflation back up.

“Higher wages mean more money chasing the same amount of goods and services, which could lead to higher prices. At the same time firms might choose to pass on higher staff costs to the end consumer. It’s this wage-price spiral which underlines the case for higher interest rates.”