The inflation rate in the UK fell only slightly in March. Consumer prices rose by 10.1 percent compared to the same month last year, the statistics office announced on Wednesday in London.
Economists polled by the Reuters news agency had expected a more significant decline to 9.8 percent, down from 10.4 percent in February. Although this moved further away from the 41-year high of 2022.11 percent in October 1, it still reduces the purchasing power of employees. Despite the decline in March, the UK's inflation rate remained the highest in Western Europe, becoming the only country in the region to be in double digits.
Food drives up prices
The number one price driver is food. According to the statistics office, prices for food and non-alcoholic beverages rose by 19.1 percent in March compared to the same month last year. This is the largest increase since August 1977.
The data suggests that the Bank of England will raise interest rates again in May. For example, core inflation - which excludes fluctuating energy and food prices - did not fall as expected in March. Instead, it remained at 6.2 percent. "Another 0.25 percentage point rate hike looks very likely in May," said analyst Hugh Gimber of J.P. Morgan Asset Management.
The Bank of England (BoE) has pushed its key interest rate higher and higher in the fight against stubbornly high inflation. The Bank of London last raised the key monetary policy rate from 4.00 to 4.25 percent in March. This was already the eleventh increase in a row.