UK March inflation holds at highest level since May 2012

British consumer price inflation held steady in March at its highest level since May last year, in line with economists' expectations, official data showed on Tuesday.

The Office for National Statistics said annual consumer price inflation held at 2.8 percent, the same as in February.

Rises in the cost of books, digital cameras and car insurance were offset by lower inflation for sofas, armchairs, petrol and diesel.

The central bank expects inflation to exceed 3 percent later this year, and many economists agree, seeing upward pressure from food prices, water and energy bills and the effect of sterling's sharp fall earlier this year.

However, there were some signs of easing price pressures from producer prices data also released by the ONS.

Factory gate inflation rose by an annual 2.0 percent, the smallest increase since July, helped by the biggest annual fall in crude oil input costs since then.

In the longer term the central bank expects consumer price inflation to remain above its 2 percent target until early 2016, pushed up by long-term rises in energy prices and university tuition fees.

This inflation outlook has made some central bankers wary about increasing the amount of stimulus for Britain's stagnant economy. The BoE's Monetary Policy Committee split 6-3 last month against restarting its asset purchase program, and policy minutes of April's meeting due on Wednesday will show whether this division remained.

(Reporting by Olesya Dmitracova and David Milliken)