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Increasing oil price to push up inflation

By Ben Woods

Published 09/04/2016

Sharply lower oil prices have kept inflation historically low, with the Bank of England predicting it to stay far beneath the Government's target for some time
Sharply lower oil prices have kept inflation historically low, with the Bank of England predicting it to stay far beneath the Government's target for some time

Inflation is expected to edge up to 0.4% when official figures for March are released on Tuesday, as rising oil price pushes up the cost of living.

The Consumer Price Index (CPI) measure of inflation is predicted to step up after Brent crude achieved stronger growth last month than in March 2015.

Inflation remained at 0.3% in February - the same as the month before - as the falling cost of second-hand cars was offset by rising food prices, according to official figures.

The Office for National Statistics (ONS) said the price of second-hand cars dropped by 5.6% year-on-year in February, while the fall in the price of food was smaller than it was in January, down 2.4% year-on-year.

Sharply lower oil prices have kept inflation historically low, with the Bank of England predicting it to stay far beneath the Government's target for some time.

Last month the central bank voted to keep rates on hold again and warned that Britain's vote on its EU membership could hit UK economic growth. Since then, the picture for the UK economy has worsened, with a series of surveys pointing to a slowdown in gross domestic product.

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