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Easter quirk holds back March inflation rate

13 April 2017

China's producer price index (PPI) rose 7.6 percent in March from a year earlier, still at an elevated pace but in line with analysts' expectations and easing from a gain of 7.8 percent in February, which was a 9-year high, the National Bureau of Statistics said on Wednesday.

ONS deputy national statistician Jonathan Athow said inflation remained steady in March because food, drink and clothing prices all went up, while air fares dropped slightly compared to previous year due to the timing of Easter.

Separately, the ONS said house prices rose by an annual 5.8 per cent in February, picking up speed from January and their increase since October.

Sterling hit its highest level in over a week against the USA dollar after the figures as investors focused on a slightly stronger-than-expected rate of nominal pay growth.

LONDON, April 12 Inflation nearly completely gnawed away the growth in pay of British workers during the three months to February, the clearest evidence yet that households are feeling the strain of rising prices as Brexit negotiations begin.

Last year's yearly inflation came to 2 percent, below the official 3-percent target.

On a month-over-month basis, CPI fell 0.3% in March from a month earlier. "However, this is offset by air fares, which fell slightly but a year ago rose substantially thanks to the timing of Easter", ONS Deputy National Statistician Jonathan Athow said in a statement alongside the release.

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The Retail Price Index (RPI), a separate measure of inflation which includes council tax and mortgage interest payments, fell to 3.1% in March, down from 3.2% in February.

Those are the lowest figures since 2014, says the BBC.

ONS senior statistician David Freeman said: "A joint record employment rate and a new record high for the number of vacancies point to continued strength in the labour market".

This was in part attributed to both sterling and oil prices remaining flat over the month, but economists warn that the later date of Easter this year has distorted the figures, by reducing costs.

"The fact that wages are falling at a time when inflation is still relatively low and unemployment is at its lowest level in 40 years, shows just how catastrophic Britain's productivity failure is for pay packets and living standards", Mr Clarke said.

"We can also expect notable increases in transport services, particularly airfares, in April and prepare for inflation move significantly higher in the months ahead, which will slow consumer spending", Ramsey said.

Gregory concludes: 'Given the uncertainty around the Brexit negotiations and the fact that there has been little sign of building domestic cost pressures, we continue to think that the MPC will hold off until the middle of next year before raising rates'.

Easter quirk holds back March inflation rate