Non-food CPI gained marginally to 2.3% in March, putting the first quarter reading also at 2.3%, or nearly a whole percentage point higher than 2016's full-year reading of 1.4%, led by significant jumps in the prices of services such as education and leisure, housing and healthcare.
However, the gains are also running largely flat against the benchmark consumer price index, which remained stuck at its fastest pace in almost four years last month, the ONS said Tuesday.
British households are grappling with sharp increases in prices, fuelled by rising energy costs and exacerbated by the pound's plunge that followed last year's vote to leave the European Union.
The NBS attributed the lower CPI reading to sharply lowering food prices, which fell 1.9 percent in March.
Producer prices rose slower than in February, with the Producer Price Index (PPI) up 7.6 percent compared to the year before, down from February's 7.8 percent.
Economists said both the consumer and factory gate inflation were generally stable in March, allowing the People's Bank of China to maintain a relatively tight monetary stance.
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The NBS said that mining inflation cooled to a still-brisk 33.7% over the year, down from 36.1% in February, while raw materials prices grew by 14.9%, below the 15.5% level reported previously.
Fuel pump prices were also dragging on CPI. However, analysts believe that prices could rise even further.
However, Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, said: "Households are being caught in a ideal storm of rising inflation and slowing labour income growth".
Sterling crept up by around 0.14 per cent against the euro to 1.1731 following the news, and also lifted to 1.2432 against the United States dollar.
Consumer inflation picked up in March as costs for health care services, housing, transportation and communication surged, suggesting stronger demand from an increasingly wealthy and rapidly aging population, and that stronger producer inflation in the past months may have started passing through to downstream consumers.
Further upside inflation surprises might persuade more members on the MPC to vote to hike rates soon, ' Tombs said. A falling pound and rising prices are depressing sales, and wages simply can't keep pace with inflation.
He adds it is worth remembering that CPI in the U.S. is only just creeping up, despite wages increasing in response to a stronger labour market.