Retail prices

In March the retail price index rose by 0.5% over the previous month to stand at 168.4 (January 1987=100) and the annual rate of inflation rose to 2.6%, the highest figure since December 1998.

The underlying rate, excluding mortgage interest payments, fell to 2.0% in March compared to 2.2% in February.

Half of the 14 groups which make up the index went up by more than 2.6%. The biggest increase - 8.2% - was in housing costs, where mortgage interest payments went up by 18%. Such a rise was due to interest rate rises kicking in in February 2000 whereas they had fallen in the previous February.

Leisure services costs rose by 5.2% as a result of more expensive foreign holidays, and tobacco was 4.9% dearer, even before the March Budget increases in duty. Other rises included motoring expenditure (+4.8%), catering, including canteen meals (+3.7%) and fares and other travel costs (+3.3%).

There were price falls in four groups - leisure goods (-4.5%), clothing and footwear (-2.8%), food (-2.1%), and household goods (-2.0%).

The tax and price index, which measures the increase in gross earnings needed to compensate for tax changes as well as prices, rose by 2.2% in February.