Inflation stays steady at 2.5%

by Richard Kilner

Story link: Inflation stays steady at 2.5%

The UK’s CPI rate of inflation remained level in March, staying at 2.5% according to the latest figures from the Office of National Statistics.

The steady CPI rate comes as a small but pleasant surprise, as it had been widely forecast to rise to an annual rate of 2.6%.

CPI rose by 0.4%, below the 0.6% rise which would have pushed the annual rate up to 2.6%.

Although lower than predicted, inflation remains above the Bank of England’s target of 2%, largely due to rising food, transport and energy prices.

The other main inflationary measure, RPI, fell from a rate of 4.1% last month to 3.8% in March.

Last week the Bank of England made another cut of 25 basis points to interest rates, which now stand at 5%.

The UK’s central bank’s approach contrasts starkly with the Federal Reserve, which has aggressively slashes interest rates in an effort to reinvigorate the US economy.