22 May: April Inflation Lands Within Whisker Of BoE Target
Steep falls in gas and electricity prices helped annual inflation to fall sharply to 2.3% in the year to April, down from 3.2% a month earlier, writes Andrew Michael.
Today’s announcement from the Office of National Statistics (ONS) puts the figure at its lowest since July 2021. The Bank of England’s inflation target is 2%.
The news offers hope of an interest cut from the Bank of England as early as June this year. The decision will be announced on 20 June. The day before, the ONS will announce the inflation figure for May.
The Bank next meets to determine the level of the Bank Rate in August.
According to the ONS, the monthly reading of the Consumer Prices Index showed that prices rose by 0.3% last month, compared with a 1.2 percentage point increase in April 2023.
Core CPI, which leaves out volatile data covering energy, food, alcohol and tobacco, stood at 3.9% in the year to April compared with 4.2% a month earlier.
CPI including owner-occupier costs (CPIH) rose by 3.0% in the year to April, down from 3.8% in March.
Grant Fitzner, ONS chief economist, said: “There was another large fall in annual inflation led by lower electricity and gas prices, due to the reduction in the Ofgem energy price cap.”
The cap fell by over 12% from 1 April to £1,690 for a household with typical consumption. It is expected to fall below £1,580 from 1 July.
Fitzner added:…
