LONDON, April 14 - British retail prices probably kept accelerating at near five-year record levels in March, analysts said, but interest rates could still be set to fall in coming months. A poll of 14 economists predicted the most closely watched inflation measure, RPIX, which measures retail prices excluding mortgages, was unchanged from February at 3 percent year-on-year. The headline RPI rate likely ticked down to 3.1 percent from 3.2 percent year-on-year in February, they said. The data is due to be published at 0830 GMT on Tuesday April 15. But rising inflation may not bar further interest rate cuts by the Bank of England, as some thought the trend was temporary, boosted by soaring petrol prices. In any case, the Bank's Monetary Policy Committee has said it expects inflation to climb further above target before falling back later in the year. "When petrol and house prices are stripped out, RPIX has remained firmly at the bottom end of its 1.5 to 3.5 percent target," Capital Economics said in a research note.
"Accordingly, there is clear scope for inflation to drop back sharply as and when those influences start to fade. This won't happen for another month or two," the consultancy said. Britain's Office of National statistics said on Monday crude oil prices fell 3.9 percent in March but had still soared 24.9 percent over the twelve months previous. But the sharp fall in crude oil after the U.S.-led war on Iraq began brought down its measure of producer input prices to read unchanged on the month after a spike in February. "We (are) looking for a peak in RPIX inflation of around 3.3 percent in the second quarter and judging it unlikely that the committee will resist cutting rates if the pickup in inflation is seen as temporary," said Alan Castle, UK economist at Lehman Brothers.//