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As for the monthly change, the largest downward contributions in both the CPIH and CPI annual rates are from motor fuels, as well as housing and household services (particularly liquid fuels).
According to the Office for National Statistics, UK inflation maintained double digits in March at 10.1%. Meanwhile, there was a consensus projection in a Reuters poll of economists of 9.8%. The unexpected inflation in March shows that UK households are still struggling with high food prices and energy bills. Although the consumer price index went higher in March, it was still slightly lower than February inflation in the UK, which came in at an unexpected 10.4%. Notably, there was a year-high of 11.1% in October 2022, which incited a little fear here and there. However, the consumer price index dropped in November, December, and January before February came again with unexpected numbers. This means that the level recorded in the second month of the year broke three consecutive months of decline.
ONS March Report Shows Persisting Inflation in UK
On an annual basis, the Consumer Prices Index, including owner occupiers’ housing costs (CPIH), increased by 8.9% in March. It went down from the figures recorded in February at 9.2%. On the other hand, core CPIH which does not cover volatile prices of food, alcohol, energy, and tobacco, rose by 5.7% over the past year. According to the ONS’s March 2023 consumer price inflation report, “the largest upward contributions to the annual CPIH inflation rate in March 2023 came from housing and household services (principally from electricity, gas and other fuels), and food and non-alcoholic beverages.”
As for the monthly change, the largest downward contributions in both the CPIH and CPI annual rates are from motor fuels, as well as housing and household services (particularly liquid fuels). The report added upward contributions from culture, recreation, and food.
“Core CPIH (excluding energy, food, alcohol and tobacco) rose by 5.7% in the 12 months to March 2023, unchanged from February; the CPIH goods annual rate eased from 13.4% to 12.7% over the two months, while the CPIH services annual rate rose slightly from 5.6% to 5.7%.”
As UK households face inflation and struggle with high food prices and energy bills, there have been multiple strikes from about half a million British workers. The Office for National Statistics revealed that the cost of food and non-alcoholic beverages had the sharpest annual increase in over 45 years. Their prices spiked 19.2% on a yearly basis last month.
Jeremy Hunt, the UK finance minister, said the March inflation updates stressed the government’s need to intensify its effort to reduce inflation. “We are on track to do this – with the OBR (Office for Budget Responsibility) forecasting we will halve inflation this year – and we’ll continue supporting people with cost-of-living support worth an average of £3,300 per household over this year and last, funded through windfall taxes on energy profits,” added he.