UK Inflation: Cost Of Living Rises Again

UK inflation rose to 3.5% last month, piling more pressure on already hard-pressed households.

Higher food and clothing prices pushed up the consumer price index (CPI (Berlin: CEJ.BE - news) ) rate of inflation by 0.1% in March, from 3.4% in February.

The rise called a halt to a five month run of declines from a peak of 5.2% in September last year.

Families were squeezed by high prices and sluggish wage growth throughout 2011 and some relief from the high cost of living was expected this year.

But Vicky Redwood, chief UK economist at Capital Economics, said the halt in the downward trend "should be only temporary".

She (SNP: ^SHEY - news) said: "Inflation should start to fall again before long, not least as last year's rises in energy prices continue to fall out of the annual comparison.

"We also expect core price pressures to ease as the economic recovery loses momentum again."

The rise will come as a concern to Bank of England policymakers, who forecast inflation to fall rapidly throughout 2012 and 2013.

It remains well above their target of 2%, reinforcing expectations that the central bank will not inject more cash into the economy next month as part of its quantitative easing programme.

The Office for National Statistics (ONS) said clothing and food prices were the biggest drivers of inflation last month.

Fruit, bread and cereals and meat saw prices rise in March, compared with falls a year ago, which acted as a drag on the overall food category.

Clothing and footwear prices were up 2.2%, driven by women's outerwear.

Despite fuel prices hitting record highs, the ONS said this had no impact on the rise in inflation since petrol and diesel also rose by similar amounts the previous March.

A spokesman for the Treasury said: "Inflation has fallen by a third since September.

"Most market commentators expect inflation to continue falling later this year, providing ongoing relief for family budgets."

The retail price index (RPI), an alternative measure of inflation, dipped slightly to 3.6% in March, from 3.7% the previous month.