Retail inflation rises to 3.81% in March

Consumer price inflation may regain some ground but should remain below 2.0%.

This was up from February's 0.8 percent, which was the lowest since January 2015, but was below forecasts of up to 1 percent.

On a monthly basis, producer price inflation halved to 0.3 percent from 0.6 percent. The ONS warns that "food, drink and clothing prices all rose in March", but were offset by relatively low airfares, since Easter this year falls in April rather than March. Within the food items, the inflation increased for vegetables to (-) 7.24%, fruits 9.35%, milk and products 4.69%, prepared meals, snacks, candies etc. 5.65%, egg 3.21% and cereals and products 5.38%.

As well as pushing down fuel prices for drivers moderately in March, a fall in worldwide oil prices helped to take some of the steam out of cost growth faced by factories, the ONS data showed.

British pay growth after accounting for inflation nearly disappeared completely in the three months to February, the clearest evidence yet that households are feeling the strain of rising prices as Brexit negotiations begin.

Non-food costs rose 2.3 percent year on year, with the rate 0.1 percentage points higher than a month earlier.

The figures were affected by a drop in food prices, while prices for medical care, housing, education and entertainment, and transportation and communication have increased, NBS's Sheng said.

On their own, food climbed 0.6 per cent between February and March, while clothing and footwear prices went up by two per cent over the period compared to a one per cent jump a year ago. While that was slightly higher than the 2.1% analysts expected, it was lower than the 2.3% recorded in the previous quarter and the worst performance in seven months. The ONS said the number of vacancies in the three-month period to the end of March rose by 16,000 to a record high 767,000.

Fuel pump prices were also dragging on CPI.

However, Mr Archer said the CPI's upward trajectory will eventually "be constrained" by a weakening United Kingdom economy over the coming months, and that businesses will not be able to raise prices without effect.

Market reaction to the jobs and wages data was positive as cable spiked from just below the 1.25 level to a more than one-week high of 1.2518.

"The PBOC's efforts to edge rates higher reflect concerns about leverage and yuan weakness", according to Tom Orlik and Fielding Chen of Bloomberg Intelligence.

The CPI has been accelerating since November when the Central Bank of Egypt (CBE) floated the exchange rate, which caused the value of the pound to plummet from EGP 8.8 to an average of 18 per dollar.

The upbeat data and the recent US interest rate hike has prompted the PBOC to tilt toward tightening in the near term. Rather, this might lead to more chances of liquidity injection into the market.

  • Santos West