Inflation News

Rising car insurance premiums put further pressure on household budgets last month as inflation remained at its highest level since last May.

Price hikes for digital cameras, books and DVDs kept Consumer Prices Index (CPI) above target but inflation eased at the petrol pumps.

CPI inflation stayed at 2.8% in March after a 5.8% increase in the cost of transport insurance offset slower rises in diesel and petrol prices, the Office for National Statistics said.

Inflation remained unchanged in February but there are fears over a summer of financial pain for consumers ahead as economists predict CPI to hit 3.5% over the next few months.

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The underlying rate of retail price index inflation remained unchanged at 3.2% in March, the ONS said.

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The headline rate of retail price index inflation rose to 3.3% in March, from 3.2% in February, the Office for National Statistics said.

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Official figures show the rate of consumer price index inflation remained unchanged at 2.8% in March.

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The rises to minimum wages announced today are still below the rate of inflation.

This means that someone earning the new rate will still be making less money in real terms because the prices of goods and services are rising more quickly.

The minimum wage increases are as follows:

• Adult minimum wage - 1.9% increase
• 18-20-year-old minimum wage - 1% increase
• 16-17-year-old minimum wage - 1.1% increase
• Apprentice minimum wage - 1.1% increase

And the current rate of inflation is:

• Consumer Prices Index (CPI) - 2.8% per year
• Retail Prices Index (RPI) - 3.2% per year

What is the CPI and how is inflation calculated?

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Labour's Shadow Treasury Minister has responded to today's inflation figures, saying that the government is "making things worse not better."

Cathy Jamieson MP said:

This government is making things worse not better. On top of rising food prices and soaring energy bills, millions will pay more next month as tax credits and child benefit are cut while millionaires pay less. The Budget must act to kickstart our flatlining economy and help people struggling with the rising cost of living right now. The tax cut for millionaires should be cancelled and people on middle and low incomes should be given a tax cut instead - for instance through a temporary VAT cut and by bringing back a lower 10p starting rate of tax.

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The biggest upward contribution to the new inflation rate of 2.8% has been increases in gas and electricity bills, as well as price changes for recreational goods, according to the Office for National Statistics.

Also contributing were prices for motor fuels and air transport.

The largest downward contributions came from small price increases for food and drinks.

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A spokesperson for the Treasury has commented on today's inflation data from the Office for National Statistics.

The spokesperson said: “Inflation is in line with market expectations and down by almost a half from its peak of 5.2 per cent.”

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Inflation has gone up a touch to 2.8% in February, from 2.7% in January. This rate of inflation is now the highest since May last year.

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The underlying rate of retail price index inflation fell to 3.2% in February from 3.3% in January, the ONS said.

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