Money (6)

The UK's rate of inflation rose from 0.3% to 0.5% in March, according to the Office for National Statistics (ONS), the highest level since December 2014.

The ONS said a sharp rise in air travel fares and the early timing of the Easter weekend were the main drivers behind the increase.

Inflation spent the majority of 2015 floating around the zero mark, even turning deflationary in some months, but it has shown signs of gradually returning to normal levels in the opening few months of 2016.

Inflation, as measured by the Consumers Prices Index (CPI), has been below the Bank of England's official target of 2% for over two years, and it expects it to remain below 1% for at least the rest of 2016.

The figures show that air fares rose nearly 25% between February and March, with the Easter weekend falling late in March this year. There was also a rise in footwear prices, but the overall rise was offset by a fall in food prices and slower fuel price rises.

Mike Cherry, national chairman at the Federation of Small Businesses (FSB), said: "Small firms are currently dealing with a raft of challenges, including the National Living Wage which came into effect this month, driving up costs and driving down modest profit. A recent FSB survey showed small business confidence hovering at its lowest level since 2013. Despite inflation edging up last month, our members welcome this ongoing period of low inflation which has helped to keep other operating costs manageable.

“Given today’s figures and the challenging economic outlook, we urge the Bank of England to remain cautious when considering whether to raise interest rates at its meeting later this week.”