In a move that surprised economists, the annual rate of inflation in Britain increased in March to its highest level for nearly seven years.
That has led to speculation that the Bank of England might soon increase the cost of borrowing as a counter measure. The March inflation figure is up 1.9% compared with the same month last year. It has risen from an annual 1.6% rise in January and February, but it is still under the British government’s target figure of 2%. In its breakdown of the figures, Britain’s Office for National Statistics said price rises for petrol, air fares and food contributed to the rise. One analyst said that as it was a mostly food and energy-related surge, if oil prices continue to decline, the inflation rate should start dropping back as well. If that does happen it is less likely that the Bank of England would increase interest rates. The central bank left them unchanged at 4.75% in April for the eighth consecutive month. It will make its decision about what to do when it meets after the UK general election on 5th May.