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Inflation climbs to higher than expected

unnamed (10)Bangla Mirror Desk :Inflation rose to a higher than expected 2.7% last month as the squeeze on household budgets intensified.

The Consumer Price Index measure of inflation rose from 2.3% in March with higher air fares the main factor, thanks to Easter falling later this year, according to the Office for National Statistics.

Rising prices for clothing, vehicle excise duty and electricity were also among the factors contributing to higher inflation last month, while falling petrol prices held back the cost of living measure.

Inflation was last at 2.7% in September 2013 and has not been higher since July that year. Economists had expected a reading of 2.6% in the latest data.

The figures further highlighted the squeeze facing households with pay rising at just 2.2% in the three months to February – and new official data due out on Wednesday is expected to show a similar picture.

Last week Bank of England governor Mark Carney said this year would see a “more challenging time for British households”.

Inflation has been rising sharply in recent months, having been hovering at close to zero until early in 2016. In April last year it stood at just 0.3%.

A slump in the pound since the Brexit vote – making imports more expensive – has helped drive up the cost of living.

Other factors include a recovery in the global oil price and rises in household energy bills announced by a number of suppliers this year.

Howard Archer, chief UK and European economist at IHS Markit, said: “The already painful squeeze on consumers intensified in April.”

Scott Bowman, UK economist at Capital Economics, said the latest sharp uptick in the inflation rate was mainly due to a series of one-off factors, such as the timing of Easter.

“Nonetheless, inflation should increase a little further in the coming months as the peak impact of the fall in the pound and utility companies complete their price hikes,” he added.

The Bank of England forecasts inflation to reach 2.8% later this year, though a number of economists expect it to climb above 3%.

Higher inflation tends to put pressure on the Bank to raise interest rates in order to keep it under control, though this is seen as unlikely at the moment given the uncertainty facing the economy amid the Brexit process.

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