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Living costs rise

Apr 20 2010

Inflation jumped in March to 3.4 per cent, up from 3 per cent in February, according to official figures. 

Annual inflation on the broader retail price index, which includes mortgage costs, also rose sharply to 4.4 per cent last month, compared with 3.7 per cent in February.

David Kern, chief economist at the British Chambers of Commerce, says: ‘With prices now rising faster than wages, the initial impact of higher inflation is to reinforce the squeeze on disposable incomes and suppress demand.’

Higher petrol prices were an important factor in rising consumer prices, according to the Office for National Statistics, along with the continuing impact of the rise in VAT, which also contributed to the spike in inflation.

The Centre for Economics Business and Research says it expects inflation to fall back next month.

Kern adds that maintaining low interests rates will remain crucial to helping businesses sustain and lead recovery.

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