Inflation drops to 2.5% in March

BRITAIN-ECONOMY-FOREX-POUND

Consumer prices have outstripped wage growth over the past year

Average earnings has increased by 2.8% in the three months to February, which is above inflation for the first time in nearly a year, official figures show.

ONS head of inflation Mike Hardie said: "Inflation fell to its lowest rate in a year, with women's clothing prices rising slower than usual for the first time this year".

Experts say that strong inflation, wage growth and unemployment data make the possibility of an interest rate hike by the Bank of England in May likely.

Inflation jumped in Britain after June 2016's vote to leave the European Union hammered the value of the pound and pushed up the cost of imports.

Many anecdotal stories in the United Kingdom suggest that inflation is considerably higher than the official figure for certain items.

Mr Bell said this could mean wages growing at 1 per cent faster than inflation.

While price rises are easing off, wage growth has accelerated.

The ONS also said United Kingdom house prices in February rose by 4.4% compared with 4.7% in January, the weakest increase in seven months.

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Food inflation is at -2.7 percent compared to 2.4 percent recorded in February, 2018 while Non Food inflation is 0.7 percent compared to 1.9 percent in February, 2018. The bank is tasked with setting policy to achieve an inflation rate of around 2 percent and updated figures due Wednesday are not expected to show much change in the annual rate in March.

The level of inflation in the United Kingdom fell more than expected in March, as the squeeze on the cost of living for Brits caused by the Brexit vote abates.

Since February, Britain's central bank has homed in on what it sees as an increasingly tight labour market that risks keeping inflation above target, unless interest rates go up faster than it thought at the start of the year.

Overall wage growth in the three months to February was steady at 2.8% - just behind the rate of inflation over the period.

At the pumps, motorists also faced lower fuel costs last month, with petrol down by 1.6p per litre on the month to 119.2p per litre.

At the same time, notes Pantheon Macreconomics, the decline in inflation represents a passing of the United Kingdom economy's post-referendum import inflation.

Laith Khalaf, senior analyst at Hargreaves Lansdown, added that the CPI figures are unlikely to deter the BoE from raising interest rates in May. "Higher rates now will mean scope for a loosening of policy should the economy take a turn for the worse".

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