Inflation fall eases interest rate hike threat

The Office for National Statistics has announced a shock fall in inflation for March, reducing the prospect of an early Bank of England interest rate hike.

The Consumer Prices Index was 4 per cent in March, down from 4.4 per cent in February - a trend put down to weakening retail sales. Food prices led the way, falling 1.4 per cent as supermarkets slashed prices to tempt cash-strapped consumers.

Although the 4 per cent inflation rate is double what the government target is, the decrease is likely to ease the pressure on the Bank of England to increase interest rates.  

Philip Shaw an economist at Investec, said: "Our central view remains that some of the gloom surrounding the economy may lift by the summer and the rates may well rise in August.

"However it is possible that today's inflation figures are the start of a more benign trend and that a hike will not occur until later in the year or perhaps beyond."

Read a full report at the Independent. ·