UK inflation falls to 2.8% in April but is expected to rise from here
UK consumer price inflation eased to 2.8 percent year-on-year in April, slightly below market expectations. Office for National Statistics data showed food inflation cooling. Economists expect base effects from energy and the Iran war to drive prices back up through the summer.
The UK Office for National Statistics said Tuesday that consumer price inflation (CPI) rose 2.8 percent year-on-year in April, down from 3.2 percent in March and below the 2.9 percent market consensus. On the month, prices rose 0.2 percent. Core inflation eased to 3.3 percent from 3.5 percent.
Food and non-alcoholic drink inflation slowed to 3.6 percent from 4.1 percent, the main driver of the softer April print. The ONS reported easing across household goods and clothing as well. Transport costs rose 1.2 percent year-on-year on a jump in fuel prices, while producer prices climbed 0.7 percent on an energy-driven wave.
Bank of England Deputy Governor Sarah Breeden warned last week that inflation could rise toward 3.5 percent through the summer. Investec economist Sandra Horsfield said: 'This is welcome relief for the Bank, but tensions in the Strait of Hormuz could disrupt the base effects.' Sterling lost 0.3 percent against the dollar after the release; the FTSE 100 closed higher on the day.
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