The April CPI Annual Inflation Rate was 2.4%.
TheApril CPI annual inflation rate was 2.4% down from 2.8% in March 2013.
This was the first fall in the index for six months, the fall came from sharp reductions in fuel prices, although food prices continued upward.
The April CPIH Measure of Inflation was 2.6%
CPIH has replaced RPI as the measure of consumer price inflation, which includes owner occupiers’ housing costs. In April this new rate was 2.2%, down from 2.6% in March
Bank of England Governor Sir Mervyn King stated last week that a recovery in the economy was finally “in sight” as the Bank revised it’s growth forecast upward for the first time since the outbreak of the financial crisis in 2008. Was this just the wishful sentiments of an outgoing governor, or a word from the wise? Perhaps a bit of both according to John Gough at UK Inflation.
“Growth can hardly be hailed as spectacular at 0.3%, and if the proceeds from switching back on North Sea oil flows following maintenance were excluded, the economy would have been as flat as a pancake. What is not so flat is inflation which is now still romping ahead of a record low wage growth of 0.4%. In the private sector there is virtually no growth in wages, so despite the fall in inflation, consumers are sill feeling worse off. Food inflation is growing at 5%, and consumers will be concerned where this is heading, if it costs £1.40 to but one leak in Waitrose.”
In the Telegraph, Samuel Tombs, UK economist at Capital Economics, said: “Inflation still looks set to climb again in the coming months as we reach the anniversary of a period of falling petrol prices and deep discounting on the high street. However, the peak, probably in June, could now be closer to 3pc than the 3.5pc we had expected beforehand”.
At This is Money.co.uk, James Knightley, economist at ING Bank, said: ‘We may see headline inflation rise modestly again in the next couple of months as sharp falls in petrol prices last summer drop out of the annual comparison, but we agree with the Bank of England that the trend will be downwards thereafter.
‘Moreover, with wage growth being so low at just 0.4 and inflation expectations remaining contained, there appears to be very little threat of a wage-price spiral in the UK’
The Ernst & Young ITEM Club forecast that UK inflation would settle at 2.6pc in 2014 and 2015 rather than fall back to 2pc by early 2015, as the Bank of England has predicted.
The bottom line is that despite a flat lining economy with no wage growth inflation remains stubonly above the 2% target rate. The test however will be that, as growth slowly recovers how much ordinary wage earners will actually benefit.