A further interest rate rise is needed

Commenting on today’s data from the Office of National Statistics, that showed an annual rate of CPI inflation of 10.1% in March 2023, a fall from 10.4% in February but the same rate of increase as in January, Kitty Ussher, Chief Economist at the Institute of Directors, said:

“Business remains extremely concerned by the rate of inflation and wants to see it under control.

“While it is a relief that the headline rate of inflation is now pointing downwards again, following the surprise rise last month, the Bank of England’s job is not yet done. The improvement this month is predominantly due to falling transport prices which, although welcome, hides an underlying stickiness in core inflation which at 6.2% has not yet started to fall. And food inflation is still rising – up from 18% to 19.1% in March.

“Taken together with yesterday’s strong labour market data it is now clear that there is more demand in the economy than the Bank of England had expected in Q1.

“The headline rate will come down a notch in April as base effects from last year work their way through the data, but to address the underlying issues the MPC still needs to raise rates again when it meets in a few weeks’ time.”