Inflation shock brought on by food prices

Interest rates are likely to remain at their record low level for months to come after falling food prices brought a surprise drop in inflation for the first time in eight months.

Bumper offers by supermarkets on bread, cereal, milk and fruit meant the Consumer Prices Index fell from 4.4 % to 4% in March.

Economists had expected a rate rise in May, but after the inflation figures, many predicted that the Bank of England will wait until at least August before increasing Bank rate from 0.5%.

The Office for National Statistics (ONS) put almost the entire March inflation cut down to cheaper food.

The big stores have been wooing shoppers by promotions on up to 40% of all their goods.


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