British inflation stood at 2.3 percent in annual terms in the month of March, unchanged from the near four-year high seen in the February reading.
This reading met analyst expectations with the month-on-month figure dropping from 0.7 percent to 0.4 percent. Rising prices for food, alcohol and tobacco, clothing and footwear, miscellaneous goods and services were the main drivers behind the surge in consumer prices, which is above the Bank of England's target of 2 percent for the second month in a row.
This is the highest consumer price growth seen since the end of 2013, the U.K.'s Office for National Statistics noted. However, analysts believe that prices could rise even further. Tuesday's data "represents just a temporary pause in an upward trend which will probably take inflation to just over 3 percent," Ruth Gregory, U.K. economist at Capital Economics, said in an emailed note.
"While food price inflation rose, from 0.3 percent to 1.6 percent, this was offset by a fall in core inflation from 2.0 percent to 1.8 percent. However, the latter mainly reflects a statistical quirk related to the timing of Easter," she added.
"We think that CPI (consumer price index) inflation will peak at just over 3 percent before the end of the year. But we don't think that that will panic the Monetary Policy Committee (MPC) into raising rates imminently. After all, the MPC tolerated an inflation overshoot of 3 percentage points in 2011," Gregory said.
Sterling moved higher against the euro following the data release. It was trading at 1.1726 euros at 9.41 a.m. London time.
The British currency has depreciated since the U.K.'s vote to leave the European Union, which has squeezed the margins of retailers when they import goods. As a result, British consumers have been forced to spend more to compensate for their losses.
Meanwhile, the annual rate of producer price inflation has dropped slightly last month, the Office for National Statistics also said on Tuesday.
The factory gate prices (output prices), which indicate how much U.K. manufacturers receive for the goods they sell at home, increased 3.6 percent on the year to March. This was slightly below the 3.7 percent seen in February. Prices of imported materials and fuels rose 17.1 percent on the year.