The publication of inflation figures for the year to March show a worrying change of direction after a fall last month.
Price inflation as measured by the Consumer Prices Index (CPI) was 3.4% compared to 3% the month before. The Retail Prices Index (RPI) measure of price inflation, which includes housing costs, jumped sharply from 3.7% to 4.4%.
The Office for National Statistics (ONS), who publish these figures each month, explained that rising petrol prices were an important contributory factor to these rises.
Could this inflation spike prompt the Bank of England Monetary Policy Committee to raise the Bank Rate next month? It has remained at the historic low of 0.5% since last March, and the asset purchase programme remains on hold.
The immediate reaction from analysts is that they expect this inflation rise to be only temporary. If the figures published this time next month show inflation reducing again, or even remaining stable at current levels, then hopefully rates will be able to remain low for the rest of the year.
We are certainly nowhere near the situation in India, where this morning they have raised interest rates by 0.25%, to 5.25%, in an attempt to combat double-digit price inflation.
Any early rate rise in the UK to deal with rising inflation could hamper what looks like a fragile economic recovery. We are due to hear about preliminary GDP figures for the first quarter of the year shortly, and those could give a better indication of what is really going on in the economy right now.
