UK households heaved a sigh of relief on Wednesday as fresh inflation figures showed the cost of living remained steady last month.
The rising price of fuel and clothes was offset by the cost of food and computer games, with the Consumer Price Index defying expectations of a rise and stabilising at 1.9% for March.
The data confirmed that prices are rising much slower than workers’ pay. Core inflation, which doesn’t include food and energy prices among others, was also unchanged at 1.8%. Economists had expected both to rise slightly.
Tej Parikh, a senior economist at the Institute of Directors, said: “Inflation is however unlikely to stay below the 2% target for much longer. With the rise in wages and firms reporting higher costs, we are likely to see upward pressure on prices over the coming months.”
Flat inflation on Wednesday means that it will be easier for the Bank of England to keep interest rates unchanged for now as it grapples with continued uncertainty over Britain’s departure from the EU.
Mark Carney, the Governor of the Bank of England, previously signalled that it could hike interest rates to keep a lid on inflationary pressures.
Food costs fell 0.1% and theatre tickets saw prices rise more slowly than they did in March last year, the Office for National Statistic said. But fuel prices were up 1%.
Howard Archer, chief economic adviser to the EY Item Club, said: “Any help to consumer purchasing power is particularly welcome as the economy is likely to be hampered by prolonged Brexit uncertainties.”
Brexit continued to weigh on the property market, with annual house-price growth slowing to 0.6% for the year to February, the least since September 2012. In January house prices fell 1.7%.
London was the worst-performing region, where property values dropped by 3.8%, the biggest fall since August 2009 when the financial crisis hit.
The average price of a property for the month of February was £226,234.