ANNUAL UK consumer prices index inflation remained at 2.8% in March, nearly three times the average rate of earnings growth, writes Ian McConnell.
The latest inflation numbers, published yesterday by the Office for National Statistics, provided a further reminder of the continuing squeeze on household incomes at a time when the overall economy faces a major headwind in the form of the Coalition's austerity programme.
The ONS cited rises last month in the prices of digital cameras, books and DVDs purchased over the internet, and hikes in car insurance premiums, as upward influences on the annual UK consumer prices index (CPI) inflation rate.
It highlighted as downward influences a smaller rise in the price of lounge furniture last month than in March 2012. It also noted smaller increases in petrol and diesel prices last month than a year earlier.
Brent crude fell below $100-a-barrel for the first time in nine months during trading yesterday.
Annual inflation on the old all-items retail prices index measure edged up from 3.2% in February to 3.3% in March.
Howard Archer, chief UK economist at consultancy IHS Global Insight, welcomed the fact annual CPI inflation had "stabilised" at 2.8%, after rising from 2.7% in January to 2.8% in February.
But he added: "Consumer price inflation of 2.8% in March is still putting a significant squeeze on households' purchasing power, given it is nearly three times annual average earnings growth of 1.0% in January."
He noted annual UK CPI inflation remained nearly a full percentage point above the 2% target set for the Bank of England. However, he added that the recent fall in oil prices, and a sharp weakening of commodity prices, might mean inflation would not rise by as much as previously feared.
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