UK inflation in surprise fall, raises doubts over rate hike

LONDON — Official figures show that inflation in Britain unexpectedly fell in March, a development that is likely to raise questions in financial markets as to whether the Bank of England will raise interest rates again this month.

The Office for National Statistics said Wednesday that consumer prices rose by 2.5 per cent in the year to March, down from 2.7 per cent the month before.

The decline was unexpected — most economists were predicting an unchanged rate.

The agency said the biggest drag on inflation came from prices for clothing and footwear rising by less than they did a year ago.

With inflation above the bank’s 2 per cent target, policymakers had prepared investors for another quarter point rate hike, which would take the main rate to 0.75 per cent.