Investing.com - Consumer price inflation (CPI) in the U.K. increased in March to a level not seen since December 2014, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics said the rate of consumer price inflation rose by a seasonally adjusted 0.5% last month, above forecasts for an increase of 0.4% and compared to the 0.3% rise in February.
The ONS noted that the largest increases to the CPI data came from airfares, along with clothing & footwear.
Month-over-month, consumer price inflation rose 0.4% in March, above forecasts for an advance of 0.3% and following a decline of 0.2% in the prior month.
Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborne, as inflation is more than a percentage point below the central bank's target of 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.5% last month, above forecasts that were looking an increase of 1.3% and compared to the 1.2% gain in February. This was the highest level since October 2014.
The retail price index increased 1.6% in March, above expectations for it to advance 1.4% with February’s reading of 1.3%.
The data also showed that the house price index rose 7.6% in March, below forecasts for a gain of 8.1% and following a 7.9% increase in February.
In an immediate reaction, the pound strengthened. GBP/USD rose to 1.4287 from around 1.4273 ahead of the release of the data, while EUR/GBP was at 0.8013 from 0.8025 earlier.
Meanwhile, European stock markets were largely unaffected and remained mostly lower. London’s FTSE 100 fell 0.36%, the Euro Stoxx 50 lost 0.71%, France's CAC 40 traded down 0.78%, while Germany's DAX shed 0.52%.