UK inflation rate eases to 2.8% in April, but slowdown is expected to be short-lived
The slowdown was driven by lower electricity and gas prices, though economists warned higher fuel costs could lift inflation again.
- On Wednesday, the Office for National Statistics reported UK inflation eased to 2.8% in April, falling below the 3% economists polled by Reuters had anticipated.
- The April 1 energy price cap from Ofgem drove the decline; Grant Fitzner, chief economist at the ONS, attributed smaller rises in water, sewage, and road tax costs to the slowdown.
- Employment data on Tuesday showed the unemployment rate rose to 5% in the three months to March, up from 4.9% in February, while lower food prices for chocolate and meat also eased inflation.
- The Bank is monitoring 'second round' effects such as wage demands, as the Monetary Policy Committee prepares for its June 18 policy meeting where economists expect rates may hold.
- Chancellor Rachel Reeves plans reforms to approve critical energy schemes amid pressure to exploit North Sea reserves, while higher energy costs from the Iran war continue to threaten the inflation outlook.
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RTÉUK inflation slows to 2.8% in April
The finance ministry is also pressing supermarket chains to introduce voluntary price caps on key food products in return for easing some regulations, two people with knowledge of the situation said on Tuesday. The key question for the BoE's interest rate-setters is whether the expected rise in headline inflation creates longer-term price pressures in the economy.
Inflation is falling more than experts expected in advance, and the Statistical Office is justifying the slowdown with a statistical effect.
UK inflation falls to lower-than-expected 2.8% but relief will be short-lived
“Despite the fall in inflation in April, the UK still appears stuck in a 1970s-style economic backdrop of energy insecurity, persistent price pressures and growing political intervention in markets” – Susannah Streeter, Wealth Club
Inflation drops back by more than forecast as energy offsets Iran war fuel hit
The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation to 2.8% in April, down from 3.3% in March. Inflation fell back to its lowest level for more than a year last month as a drop in energy prices offset soaring fuel costs, but fears are mounting over a looming cost-of-living squeeze caused by the Iran war. The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation fell to 2.8% in April, down…
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