UK inflation rises more than expected to 15-month high

UK inflation increased more than expected in March as an early Easter lifted air fares and as clothing prices rose.

The consumer price index grew 0.5% from a year earlier, beating analysts' estimates of 0.4% and marking an improvement on February's 0.3% gain, the Office for National Statistics revealed. It was the fastest pace of growth since December 2014.

Core inflation, which excludes volatile food and energy prices, jumped 1.5% year-on-year in March, compared to forecasts of 1.3% and the previous month's 1.2% increase.

Inflation remains well below the Bank of England's 2% target and the central bank is expected to keep interest rates unchanged when it announces its latest policy decision on Thursday.

"Today’s increase is unlikely to spur the Bank of England into considering raising interest rates on Thursday with widespread consensus that this week will see the 85th consecutive month that the bank keeps interest rates on hold at their emergency level of 0.50%," said Maike Currie, investment director for personal investing at Fidelity International.

"Markets are expected to take little encouragement from this decision."

The pound rebounded following the report, rising 0.48% against the dollar.