UK inflation – ready for take-off?

British inflation held steady in March due to the later timing of this year’s Easter holidays which pushed down airfares, and a dip in global oil prices, but the squeeze on households looks set to resume soon. David Pollard reports.

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For many, it’s time to get away – without, hopefully, too many delays.
But the Easter holiday’s later dates this year could be holding one thing up …
The rise in UK inflation.
Prices rising in March at exactly the same 2.3 per cent rate as February.
As airlines postpone fare hikes and oil prices dip.
Fasten seatbelts, though, for next month.

(SOUNDBITE) (English) CIBC, HEAD OF FX STRATEGY, JEREMY STRETCH, SAYING:

“We could easily see CPI in the month of April running at 2.6 or even 2.7 per cent potentially. So that will see prices running well ahead of earnings, and I think that trend is going to persist over the course of the upcoming months. And that is one of the reasons why the consumer will find it increasingly difficult and challenging.”
If they aren’t already ….
The latest BRC retail survey sees shoppers easing back on spending.
Sales, it says, down one per cent year on year on a like-for-like basis.
Inflation – say economists – could reach three per cent by year end.
Hitting not just the consumer, but UK plc.

(SOUNDBITE) (English) GLOBAL FINANCIAL ECONOMIST, COMMERZBANK, PETER DIXON, SAYING:

“It’s a worry in the sense that it will probably mean that the economy slows quite sharply. But I think in many respects it’s also a positive sign because it would…

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