The US Treasury and State Departments impose sanctions and visa restrictions on 37 people in 13 countries
The Office for National Statistics on Tuesday said consumer price inflation increased to 3.4 percent last month from 3 percent in February, well above the Bank of England’s 2 percent target and economists’ expectations of a rise to 3.2 percent.
While inflation for the first quarter is very close to the central bank’s February forecast, the CPI rate is not showing the steady decline from January’s 14-month peak that policymakers had hoped for based on general economic weakness.
“Today’s inflation release is certainly bad news for the BoE as a clear disinflation trend has not emerged yet,” said Chiara Corsa, an economist for Italian bank UniCredit.
One factor making it harder to forecast inflation has been uncertainty about how much retailers are passing on higher import costs caused by sterling’s 20 percent fall since the start of the financial crisis.
Clothing and footwear prices, which have been pushed down by cheap imports for years, fell by their smallest amount since July 2007 — one reason Deutsche Bank economist George Buckley gave for inflation exceeding his forecast.
Gilt futures fell and sterling rose on market speculation that the BoE could raise rates sooner than expected. But most investment bank economists said the data on its own was not enough for them to bring forward average forecasts of a rate rise from the last three months of 2010.
“Today’s figures should not have much bearing on interest rates. We still expect rates to remain on hold for the remainder of this year,” said Ernst & Young economic adviser Hetal Mehta.
“Higher petrol prices will continue to feed through to higher consumer price inflation in the next few months, keeping the CPI rate above 3 percent, but unless the oil price continues to rise then these effects will fade,” she added.
If inflation does not fall below 3 percent this month, BoE Governor Mervyn King will have to write a letter in May explaining why the central bank has not yet got prices under control to whoever is finance minister after Britain’s May 6 election.
The BoE still has interest rates at a record low 0.5 percent, and completed 200 billion pounds of quantitative easing in February in response to the country’s deepest recession since World War Two.
Economists still expect a gradual fall in inflation, as the one-off effects pushing up March’s annual CPI rate are slowly outweighed by weak growth and high unemployment, which limit the ability of firms and workers to raise prices and wages.
The failure of household gas bills to repeat last year’s record fall accounted for a quarter of the increase in the annual rate between February and March.
Petrol prices and higher air fares, possibly due to earlier Easter holidays, contributed a similar upward thrust.
The third-biggest factor was a rise in food and drink prices — especially cucumbers, cauliflowers, lettuce, tomatoes and courgettes affected by poor weather. The earthquake in Chile pushed up the price of imported grapes.
Nonetheless, some economists such as Citi’s Michael Saunders said it was too simplistic to blame high inflation purely on increased oil prices and one-off factors.
“It would be wrong to blame the overshoot in inflation on just a few items; the price pressures are much wider than that,” said Saunders, who forecast a further rise in inflation to 3.7 percent in April.
“The inflation boost from the weak pound is probably not yet finished and will continue to lift inflation this year. In addition, it seems quite likely that the economy has much less slack than implied by GDP-based output gap estimates.”
Across the main categories in the CPI basket, the biggest rise came from transport, which was up a record 11.3 percent on the year. Communication costs rose 4.9 percent, again the highest annual rate since records began in January 1997.
Clothing and footwear prices fell 2.6 percent on the year, and services overall rose at their fastest rate since May.
The retail price inflation gauge — which includes a broader range of housing costs — hit its highest since September 2008, rising to 4.4 percent from 3.7 percent, versus forecasts for a rise to 4.2 percent. RPI is used to index many social security payments and some wages.
Reigning Premier League champions go to Luton on Sunday and will be out to avoid going five games without a win
No chants were made and there were no banners nor placards but onlookers did not miss the message
Arabic Language Youth Council's effort delves into the concept of sustainability in Arab culture
Team Abu Dhabi focus switches to Sharjah as Torrente aims for big finish to F1H2O season