UK inflation steady at 2.3% in March - as it happened
UK consumer price index above Bank of England's 2% target again, putting continuing pressure on real incomes
2.28pm BST
Here's a round up of the day's events.
UK inflation was flat, with the consumer price index coming in at 2.3% in March for the second month in a row.
1.20pm BST
The pound is currently up 0.25% at $1.2441, having been as high as $1.2445 and as low as $1.2404. FXTM research analyst Lukman Otunuga said:
Sterling was volatile on Tuesday, with prices oscillating between losses and gains after markets digested the UK's steady 2.3% inflation figure for March, which was the highest level since September 2013. The ongoing currency weakness created by Brexit, coupled with rising oil prices has elevated inflation above the Bank of England's 2% target, with speculation mounting over CPI following its positive trajectory this quarter. Although the immediate market reaction to March's headline CPI reading was noticeably bullish, gains may be relinquished when participants start to re-evaluate the impact it may have on the UK economy. With inflation still above average earning there is a threat of consumer spending taking a hit, which could spark concerns over the longevity of the UK's consumer-fuelled economic growth.
12.07pm BST
Should the Bank of England raise interest rates? The answer is complicated, writes Larry Elliott:
It seems so obvious. The Bank of England sets interest rates to hit the government's 2% inflation target. Inflation is currently 2.3% and - despite holding steady in March - is certain to go higher over the coming months. Higher borrowing costs choke off inflationary pressure. Therefore interest rates should now be going up.
In reality, it is a bit more complicated than that. The first thing the nine members of the Bank's monetary policy committee have to decide is whether the above-target inflation seen in the last couple of months is a temporary blip. It's quite clear it isn't. Food is going up, energy companies are raising their tariffs, retailers are passing on the higher costs of imports caused by a weaker pound.
Related: Inflation is only going one way. Let's hope interest rates don't follow | Larry Elliott
11.50am BST
Here's our report on the inflation figures:
Rising food and clothing prices kept Britain's inflation rate at its highest level for more than three years last month, putting household budgets under pressure as the Brexit effect on the pound worked its way through the economy.
Official figures put inflation on the consumer prices index (CPI) at 2.3% for the second month running in March, in line with economists' forecasts, as food prices rose at the fastest pace for three years, increasing 1.2% on the year.
Related: UK inflation stays at three-year high of 2.3%
11.37am BST
$FTSE enjoying itself today, don't forget April is historically a strong month (ave. return 1.8% over last 20 yrs): pic.twitter.com/HEz0qZ4JLD
11.33am BST
With the pound now fairly flat against the dollar in the wake of the inflation numbers, the FTSE 100 is pretty buoyant, up 44 points or 0.6%.
The host of overseas earners in the UK's leading index are supported by a weaker sterling, and the fact the currency has moved no higher has been taken positively by investors. Connor Campbell at Spreadex said:
While the pound was clearly disappointed that the CPI didn't grow any further in March, the fact that it avoided the dip forecast by analysts meant the currency's losses weren't too pronounced.
Against the euro sterling fell 0.2%, shuffling under 1.17 in the process; against the dollar, however, the pound sat flat, keeping its head just above 1.24. Though the pound didn't have an aggressively sour reaction to the inflation figure, the fact that it didn't move any higher was enough to lift the FTSE, which surged more than half a percent to hit a 3 week high.
11.08am BST
UK house prices rose by 5.8% year on year in February compared to 5.3% the previous month, with London showing the slowest increase since April 2012 at 3.7%.
The UK figure is still below the average annual house price growth of 7.3% seen in 2016. The Office for National Statistics said:
The main contribution to the increase in UK house prices came from England, where house prices increased by 6.3% over the year to February 2017, with the average price in England now 234,000. Wales saw house prices increase by 1.8% over the last 12 months to stand at 145,000. In Scotland, the average price increased by 3.1% over the year to stand at 139,000. The average price in Northern Ireland currently stands at 125,000, an increase of 5.7% over the last 12 months.
House prices in Feb were up just 3.7% y/y in London vs 6% in the rest of the UK. Prices haven't underperformed in the capital since Aug 09: pic.twitter.com/n6nMxiqnZz
10.58am BST
The forthcoming French presidential election is causing some tremors for the euro:
Investors are showing increasing concern before the French presidential elections https://t.co/kz0ZGjav4q pic.twitter.com/zbdlq0igts
The single currency has held up so far but investors are becoming particularly worried ahead of April 23rd (the first round of the French election).
10.26am BST
Back with UK inflation, and there is one category of consumer who is being particularly hard hit by price rises, points out Laith Khalaf, senior analyst at Hargreaves Lansdown:
In March food inflation really took off, which suggests the supermarkets are now starting to pass rising import costs onto consumers.
Crisps and margarine saw particularly steep price rises, not good news for fans of the crisp sandwich.
The inflationary squeeze that's coming is going to mean consumers have to spend more at the check outs and petrol pumps, and that reduces their capacity to fund discretionary spending. It also reduces people's propensity to save, which is particularly worrying at a time when the UK's savings ratio is at its lowest level since the 1960s, and retirement is costlier than ever because of gains in life expectancy.
10.21am BST
Away from UK inflation, and German consumers remain confident it seems.
The ZEW Institute's economic sentiment index came in at 19.5 in April compared to 12.8 the previous month and expectations of a figure of 14. This was the highest level since August 2015. ZEW president Achim Wambach said:
Though the long-term average as calculated from the beginning of the survey (December 1991) is yet to be beaten, these results are comparable to the expectations prior to the Brexit vote in June 2016.
The German economic situation has proved fairly robust in the first quarter. This is highlighted by the solid figures for growth in industrial production, the construction sector and retail sales from February. In addition, the consistently high labour demand has boosted private consumption.
#Eurozone #industrial production unexepctedly dipped 0.3% m/m in Feb (+0.3% in Jan) as limited by 4.7% drop in energy output; up 1.2% y/y
10.07am BST
More reaction:
10.01am BST
And here's the TUC on the inflation figures. General Secretary Frances O'Grady said:
Rising prices and sluggish pay increases mean that real earnings growth has now ground to a halt. Without government action, another living standards crisis is on the cards.
We urgently need more investment in skills and infrastructure to build strong foundations for better paid jobs. And it's time to scrap the pay restrictions hitting midwives, teachers and other public servants.
9.49am BST
Retail sales figures from the British Retail Consortium released overnight showed that the rise in inflation is already starting to bite, with non-food high street sales suffering the worst fall in nearly six years. With price rises outstripping wages, we are getting progressively poorer each month. Unsurprisingly, consumers are choosing to instead focus their spending on essential items like food and fuel. Changing shopping habits and a fall in spending should flash amber warning lights for an economy reliant on confident consumers hitting the shops.
9.43am BST
Rising inflation which is outpacing wage growth puts pressure on household incomes of course, something the Treasury seems aware of in its response to this latest data. A spokesperson said:
We are building an economy that works for everyone and helping families with the cost of living by cutting income taxes for 31 million people, freezing fuel duty and increasing the National Living Wage to 7.50 per hour.
9.39am BST
The pound, initially down on the inflation figures, is now at a day's high of $1.2446 against the dollar.
9.38am BST
9.31am BST
BREAKING NEWS
UK consumer price inflation - the Bank of England's preferred measure - has come in at 2.3% year on year in March, the same as the previous month and in line with expectations.
9.13am BST
More on the news on Monday that Barclays chief executive Jes Staley had attempted to unmask a whistleblower despite being warned not to, and is facing an investigation by regulators.
Thomas Moore, investment director at Standard Life Investments told the BBC Today programme that the timing of Staley's actions was "amazing" given that only last year the Financial Conduct Authority issued a report saying it wanted to encourage a culture where whistleblowers could come forward without fear of reprisals.
8.42am BST
Shares in JD Sports Fashion have hit a new all time high after it unveiled record full year profits. They jumped as high as 425p in the immediate wake of the figures and are currently up 4% at 424p. Reuters reports:
Britain's JD Sports Fashion Plc posted a 55 percent rise in full-year headline pretax profit as demand for leisurewear products remained firm.
JD Sports, which alongside its core sports retail business runs fashion and outdoor retail outlets such as Scotts and Blacks, said headline profit before tax and exceptional items rose to a record 244.8 million pounds from 157.1 million a year earlier.
The results are an example of what the right product, well merchandised can achieve in the current environment and, whilst the trainer trend tailwind has been off the Beaufort scale, JD has sailed it skilfully. Both sports fashion and outdoor exceeded expectations.
8.17am BST
Connor Campbell, financial analyst at Spreadex, said:
The Eurozone indices fell sharply this Tuesday, the DAX and CAC each dropping half a percent. It appears that the current global political tensions, namely those between the US and Syria/Russia, as well as North Korea, have spooked investors, the FTSE perhaps only avoiding the same level of losses due to the impending inflation update.
8.07am BST
As expected, investors are taking a cautious view in the wake of growing geo-political tensions. Those investors who are around, that is, given that trading is likely to be fairly quiet in the run-up to the Easter break.
The FTSE 100 has fallen around 10 points or 0.1% while France's Cac has opened 0.5% lower, Germany's Dax is down 0.4% and Spain's Ibex is 0.6% lower.
EU Movers:
Balfour Beatty +3.8%
Givaudan +3.2%
LVMH +2.3%
Kering +1.3%
Altice +0.7%
ABB -1.4%
7.58am BST
Adding to the general uncertainty is the US Federal Reserve, which recently said it could begin selling off assets bought following the financial crisis, as well as raising interest rates further this year.
On Monday Fed chair Janet Yellen made positive noises on the US economy, adding to the feeling that the central bank will continue moving away from its stimulus programme. Reuters reports:
The Federal Reserve's plans to raise U.S. interest rates gradually are aimed at sustaining full employment and near-2-percent inflation without letting the economy overheat, Fed Chair Janet Yellen said on Monday.
"I think we have a healthy economy now," Yellen said at an event at the University of Michigan's Ford School of Public Policy in Ann Arbor.
7.32am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Stock markets are back in nervous mode, with a number of political concerns to worry investors. The US attack on Syria has increased the global uncertainty, and on top of that there are increasing tensions between President Trump's administration and North Korea. In Europe the French presidential race continues to dominate the agenda. Ipek Ozkardeskaya, senior market analyst at London Capital Group, said:
Flight to safety continues, as geopolitical concerns occupy the global headlines with North Korea's missile tests, US' strike on Syria and Jean-Luc Melonchon gaining support in the French election race... According to one Kantar poll, Melonchon advanced to the third place, taking lead over Francois Fillon. Political risks could encourage a further slide in the euro.
Our European opening calls:$FTSE 7343 down 6
$DAX 12170 down 30
$CAC 5099 down 8$IBEX 10406 down 32$MIB 20145 down 57
We see headline CPI inflation easing to 2.1% year on year in March from 2.3% year on year in the previous month, and core inflation down by 0.3 percentage points to 1.7% year on year. The later timing of Easter this year and a negative contribution from motor fuel prices is likely to more than offset substantial price rises by some of the Big 6 UK energy suppliers.
Related: Price rises and pay figures to underline Brexit strain on Britons
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