UK Inflation Hits 3.3% Amid Rising Energy Prices

The UK's annual inflation rate surged to 3.3% in March, attributed to rising energy prices following the Middle East conflict. Official data from the Consumer Price Index (CPI) indicated a 3.0% increase over the previous 12 months, with fuel prices experiencing the largest rise in three years.

Grant Fitzner, Chief Economist, noted the significant impact of the conflict on living costs for millions of Britons. In response, Finance Minister Rachel Reeves announced plans to raise the government's windfall tax on low-carbon electricity generation from 55% to 45% to support households and businesses.

However, she resisted calls to directly lower energy costs for consumers. The latest inflation figures align with a similar CPI increase in the United States, which stood at 2.4% in February.

The Bank of England is likely to keep interest rates unchanged despite the inflation rise, as economic growth is projected to weaken due to the ongoing conflict, with the International Monetary Fund revising its growth forecast for the UK economy down to 0.8% from 1.3%.