* CPI rises for first time since June 2013
* Higher transport costs offset by lower food price growth
* House price growth eases in year to March
* Govt says BoE “should not hesitate” to act on housing if needed (Adds details, economist quotes, sterling)
By William Schomberg and Ana Nicolaci da Costa
LONDON, May 20 (Reuters) - British inflation rose in April for the first time in 10 months, but as the increase was partly due to a late Easter holiday, which pushed up transport costs, it was unlikely to alter interest rate expectations.
Official data also showed that growth in house prices eased in March, potentially tempering concerns about a bubble brewing in the property market although some more up-to-date surveys have shown prices picking up again.
The consumer price index rose more than expected to an annual rate of 1.8 percent in April, from 1.6 percent in March, which had been its lowest level in more than four years, the Office for National Statistics ONS said.
It was the first rise in the CPI since June 2013 and above a Reuters poll forecast for inflation of 1.7 percent in April.
Sterling hit a 16-month high against the euro and rose against the dollar before giving up much of its gains as market expectations that the Bank of England will raise interest rates in about a year’s time remained largely intact.
The opposition Labour party jumped on Tuesday’s figures, saying they showed the government’s complacency about the “cost of living” crisis facing many Britons as wage growth has lagged inflation.
Economists however saw little change in price pressures.
“Easter effects aside, the latest release provides little evidence of significant or broad-based price pressures,” said Victoria Clarke, an economist with bank Investec.
Factory gate inflation in April was weaker than economists’ predictions.
Higher airfares linked to Easter and other transport costs helped push up consumer prices, the ONS said. Easter fell in April this year but in late March last year.
Offsetting those rises, food price growth was the lowest in eight years as a mild spring kept vegetable prices down.
Core CPI, which excludes food costs and other items but does include transport costs, rose 2.0 percent, its strongest rate since September last year.
House prices - which are an increasing source of concern for the Bank of England - were up 8.0 percent on the year in March, slowing from a 9.2 percent rise in February, the ONS also said.
Prices in London, however, were up 17 percent on the year, although that was less than a 17.8 percent increase in February, the biggest increase since 2007.
BoE Governor Mark Carney said on Sunday that the housing market posed the biggest risk to Britain’s economic recovery.
The finance ministry noted the slower growth in house prices in March but a spokesman said the Bank of England “should not hesitate” to use its powers to rein in the market if needed.
------------------------ UK inflation, unemployment and base rates link.reuters.com/sub42v UK unemployment and real wage growth link.reuters.com/teg96v ONS UK vs London house prices link.reuters.com/jyw86v
Relatively low consumer inflation in Britain is helping the BoE to keep interest rates at a record low level of 0.5 percent, even though economic growth is likely to accelerate to about 3 percent this year.
Before December last year, annual inflation exceeded the central bank’s 2 percent target every month since December 2009.
Last week, the BoE said inflation - which has been pushed down in part by an appreciation of the pound - was likely to remain below its target in two years’ time.
Weaker price growth has been helping wages to recover some of their value lost since the financial crisis.
Average weekly earnings rose 1.7 percent in the three months to March, according to the most recent data available, slightly below the rate of inflation in April.
Most economists expect things to get better albeit slowly.
“It still looks highly probable that earnings growth will increasingly move above inflation over the coming months thereby lifting consumers’ purchasing power,” said Howard Archer, an economist at IHS Global, a consultancy. (Writing by William Schomberg; Editing by Susan Fenton)