The CPI is now more than 1 percentage point over the Government's target of 2 per cent and the latest increase is expected to prompt a further rise in UK interest rates.
The Bank of England has raised UK rates three times since August last year in an attempt to contain inflationary pressures, piling pressure on retailers, especially in big-ticket categories, as shoppers rein in spending.
British Retail Consortium business information analyst Malcom Pinkerton said another interest rate rise could be disastrous for retailers. He said: 'There is currently no inflationary pressure coming from the high street. What we have is short term and will ease off in the next couple of months.
'The upward effect has been driven by food, because of a weak March last year. Furniture prices are starting to adjust after a long period of discounting. And the launch of the PS3 will push prices higher, although this is short term and will level off.'
The largest upward effect on the CPI was food and non-alcoholic drinks. Shop-bought milk prices increased by more than 2 per cent, compared with a fall of about 8 per cent last year when supermarkets cut prices.
Small upward effects came from bread, cereals and meat as prices rose in March. Downward contributions came from fruit.
Further upward contributions came from furniture, where the monthly price increase was a record 10 per cent. The prices of major household appliances also rose in March, but fell a year ago. However, in recreation and culture - prices for computer games increased this year, compared to a decrease in 2006.
In cultural services, admission prices for theatres and live music events rose in March but fell last year. In transport, petrol prices rose by nearly 2.5 pence per litre during March, compared with little change a year ago.
However, a large downward effect on the CPI came from housing and household services. Gas prices fell during March, but electricity prices showed little change compared with last year when tariffs for both gas and electricity rose by about 3 per cent.
The Retail Prices Index (RPI) also rose to 4.8 per cent during March, up from 4.6 per cent the month before.
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