UK inflation fell to 1.6% in March

UK inflation fell to 1.6% in March, its lowest rate since October 2009.

According to inflation data from the Office for National Statistics inflation data, the Consumer Prices Index (CPI) grew by 1.6% in the year to March 2014, down from 1.7% in February.

Transport and motor fuels were the largest contributors to the fall in the rate while clothing and furniture & household goods sectors also helped in decreasing the rate.

The output price index for goods produced by UK manufacturers (factory gate prices), rose 0.5% in the year to March, compared with a rise of 0.6% in the year to February.

UK house prices increased by 9.1% in the year to February 2014, up from 6.8% in the year to January 2014. Annual house price increases in England were driven by rises in London (17.7%), the South East (8.0%) and the East of England (7.7%).

House price annual inflation grew by 9.7% in England, 5.3% in Wales, 2.4% in Scotland and 2.8% in Northern Ireland.

Chancellor George Osborne said: “These latest inflation numbers are welcome news for families. Lower inflation and rising job numbers show our long term plan is working, and bringing greater economic security. But there is still much more we need to do to build the resilient economy I spoke of at the budget.”

Ben Brettell, economics editor, Hargreaves Lansdown, said:

“Today’s figures confirm the complete absence of pressure on the Bank of England to raise interest rates. The Bank of England is now targeting the UK’s ‘output gap’ rather than unemployment. The Office for Budget Responsibility forecast this won’t close until 2018 – combined with continuing low inflation this gives Mark Carney plenty of leeway to keep rates low, and I don’t expect them to rise until mid-2015 at the very earliest.”

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