Britain pulled out of a seven-month stint of double-digit inflation last month, but the sharp decline still marked the third consecutive month that price pressures have been stronger than feared.
The consumer price index (CPI) fell to 8.7 percent from 10.1 percent the previous month, the British Office for National Statistics said yesterday.
It marked the biggest drop in the annual inflation rate in more than 30 years. None of the 36 economists surveyed expected a reading that high.
Photo: Bloomberg
The figures are likely to fuel market expectations that the Bank of England (BOE) would extend its cycle of interest-rate hikes through the summer to stamp out price pressures.
The latest result was seen as a key crossroads determining whether the central bank could soon let up on the fight against inflation.
The latest CPI reading was helped by last year’s sharp increase in energy prices falling out of the comparison. Russia choked off supplies of natural gas to Europe after invading Ukraine, sending electricity prices spiraling higher across the continent.
Most concerning for the BOE, core inflation — which excludes volatile food and energy prices — accelerated unexpectedly to 6.8 percent, the highest since 1992 and up from 6.2 percent in March.
Natural gas and electricity combined contributed 1.8 percentage points of the fall in inflation.
However, the cost of telecommunications services, reflecting a jump in mobile phone bills, and alcohol and tobacco rose. The cost of used vehicles also rose.
“The rate of inflation fell notably as the large energy price rises seen last year were not repeated this April, but was offset partially by increases in the cost of second-hand cars and cigarettes,” ONS chief economist Grant Fitzner said.
“However, prices in general remain substantially higher than they were this time last year, with annual food price inflation near historic highs,” he added.
Grocery price inflation cooled slightly to 19 percent, but remained close to the highest rate in more than 45 years.
The BOE has blamed hedging by food producers and supermarkets rebuilding their profit margins again for keeping grocery inflation high, despite falls on global agricultural commodity markets.
BOE Governor Andrew Bailey has said the central bank is looking for “evidence” that inflation is coming down before it can “rest” on its most aggressive hiking cycle in four decades.
A total of 12 consecutive hikes by the BOE have lifted the key lending rate to 4.5 percent, the highest since 2008.
The BOE expects a sharp decline in UK inflation throughout this year, but is concerned about the persistence of price pressures even after the sharp decline in energy prices. Grocery bills have kept inflation elevated, the economy has been more resilient than expected, and the labor market remains extremely tight, fueling pay pressures.
“The IMF said yesterday we’ve acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast,” British Chancellor of the Exchequer Jeremy Hunt said. “So as well as helping families with around ￡3,000 [US$3,728] of cost-of-living support this year and last, we must stick resolutely to the plan to get inflation down.”
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
RSS