UK Inflation Rate Eases to 2.4% in April

Annual inflation in the UK edged down to 2.4 percent in April of 2018 from 2.5 percent in March, below market expectations of 2.5 percent. It is the lowest rate since March of 2017, mainly due to a slowdown in cost of transport amid a drop in air fares.

Year-on-year, prices rose at a slower pace for: transport (2.4 percent compared to 3 percent), mainly due to a 7.9 percent slump in air fare costs amid differences in the Easter timming while fuels and lubricants went up 3.1 percent; food and non-alcoholic beverages (2.7 percent compared to 3 percent), namely meat; clothing and footwear (1.7 percent compared to 2.5 percent); and health (2.7 percent compared to 2.8 percent). On the other hand, inflation was steady for housing and utilities (2.1 percent) and education (2.8 percent) and prices increased more for recreation and culture (3.5 percent from 3.3 percent); restaurants and hotels (2.7 percent compared to 2.5 percent); furniture, household equipment and maintenance (2.7 percent compared to 2.5 percent); and alcoholic beverages and tobacco (4 percent compared to 3.5 percent). Also, cost rebounded for communication (1 percent compared to -0.4 percent) and prices of miscellaneous goods and services were flat after a 0.1 percent decline in March.

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.2 percent in April, easing from a 2.3 percent increase in March.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, declined to 2.1 percent in April from 2.3 percent in March, also below market consensus of 2.2 percent and the lowest rate since March of 2017.

On a monthly basis, consumer prices rose 0.4 percent, following a 0.1 percent gain in March but below forecasts of 0.5 percent. The largest downward contribution came from transport, principally from air fares. The timing of Easter in the middle of April 2017 contributed to air fares rising by 18.6 percent on the month whereas this year, Easter fell at the beginning of April before the price collection period and there was no price rise. Instead, fares fell slightly, by 0.2 percent. Within the transport category, the downward contribution from air fares was partially offset by an upward effect from motor fuels. Petrol prices rose by 1.5 pence per litre to stand at 120.7 pence per litre and diesel prices rose by 1.6 pence per litre. Clothing and footwear also had a downward effect, with prices rising by 0.4 percent. The effect came mainly from men’s clothing. A smaller downward contribution came from food and non-alcoholic beverages. This was from a range of food products with the largest single effect from meat. The downward contribution from food was partially offset by an upward effect from mineral waters, soft drinks and juices, where prices rose by 2.8 percent. Most of this effect came from products affected by the introduction of the Soft Drinks Industry Levy or “Sugar Tax”, such as colas and energy drinks. The downward effects from these broad categories were partially offset by a small upward contribution from communication, where prices of telephone equipment and services rose by 0.4 percent, entirely due to communication services comprising, for example, internet access, television and phone services.

UK Inflation Rate Eases to 2.4% in April

ONS | Joana Taborda |
5/23/2018 9:47:45 AM