UK Trade Deficit Widens in April

The UK’s trade deficit widened unexpectedly in April as imports rebounded and import prices inflation reached a 15-year high, official data showed on Wednesday.

The Office for National Statistics said the deficit on trade in goods widened from a downwardly £7.1bn in March to £7.6bn in April, due to a recovery in imports. It had narrowed by £1.6bn to £22.4bn in the three months to April.

The ONS said the latest estimate of the trend suggested goods trade was fairly flat, with the value of both imports and exports rising slightly in recent months.

The Bank of England is expecting net trade to make a stronger contribution to the UK economy over the coming year as domestic demand slackens and the weak pound boosts exporters.

But the depreciation in sterling is driving up the value of imports – already hit by higher prices for oil and imported food – and increasing the pressures on consumer price inflation.

Annual inflation in import prices, excluding oil and other erratic items, rose from 6 per cent in March to 8.2 per cent in April.

The deficit on oil trade was roughly unchanged at £0.4bn in April, while the total deficit on trade in goods and services widened from £3.8bn to £4.3bn.

UK Trade Deficit Widens in April, Bloomberg
6/11/2008 6:33:58 AM