United Kingdom: Inflation unchanged in March
Consumer prices rose 0.2% in March over the previous month, down from February’s 0.5% increase. March’s reading was underpinned by higher prices for clothing and footwear; and health.
Inflation was stable at 1.9% in March, close to the Bank of England’s (BoE) 2.0% target. Core inflation—which excludes food and energy costs—was unchanged at 1.8%.
Looking ahead, inflation is likely to stay close to the BoE’s target, with solid wage growth and the recent increase in oil prices providing upward pressure. The outcome of the Brexit process is a key risk to the inflation outlook. A swift resolution to the impasse—which currently appears unlikely—could boost growth and inflation, a no-deal Brexit later this year could lead to a sharp currency depreciation and fan price pressures, even in the face of weaker domestic demand.