The five month trend for falling inflation in the UK came to an end last month, as figures show inflation rose to 3.5% in March.
The rise is bad news for families around the UK who are already struggling to make ends meet. If you are finding it tough financially, you can compare loans with Money Expert.
The Office for National Statistics (ONS) has revealed that consumer price inflation (CPI) rose to 3.5% in March, up from 3.4% in February.
It is the first time that CPI has increased in five months, and has sparked fears over what it could do to the fragile British economy.
According to the ONS, the biggest drivers of the rise in inflation were food and clothing prices – both of which saw an annual rise.
The annual rate of food was pushed up to 4.6% – the highest since October last year. Annual clothing inflation was also at its highest since October, at a rate of 3.2%.
The drought across England could put fresh food prices up even further in the coming months, while petrol prices remain very high.
The inflation increase will be bad news for the Bank of England and the government, which has an inflation target of less than 2% to reach by the end of the year.
The increase presents a dilemma for the Bank of England, as its current programme of quantitative easing (QE) comes to an end next month.
“In the context of the Bank of England, we are not growing and certainly not growing fast enough, and that argues for more QE,” said Alan Clarke, an economist with Scotiabank.
“But uncomfortably high inflation is a significant obstruction. So it is not going to be an easy decision for the Bank of England in May,” he added.
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