On Wednesday, official data indicated a sharp decrease in Britain’s annual inflation rate, falling to 8.7% in April, which is the lowest in 13 months. The Office for National Statistics revealed that energy prices were much weaker than a year earlier, causing the rate of price increases to slow from March’s 10.1% and bringing inflation under 10% for the first time since August 2020. Despite the sharp drop, April’s rate was above the Bank of England’s inflation prediction of 8.4% last month. In addition, the UK government anticipates inflation dropping to around 5.0% by year-end.
ONS Chief Economist, Grant Fitzner, noted that although prices in general remain substantially higher than they were last year, annual food price inflation has hit historic highs. Also, April’s annual inflation rate was the highest among countries in the Group of Seven rich economies, which include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
Fitzner added that last month, “the rate of inflation fell notably as the large energy price rises seen last year were not repeated… but was offset partially by increases in the cost of second-hand cars and cigarettes.” The decrease in inflation was due to weaker energy prices. Following Wednesday’s data, finance minister Jeremy Hunt stated that although food prices are still rising too fast, it is positive that inflation is now in single digits.
The International Monetary Fund had delivered a major U-turn on its forecast for the UK economy just a day earlier, citing weaker energy prices. In its latest outlook document, the IMF forecasted that Britain’s economy is expected to expand by 0.4% in 2023, ripping up its previous forecast in April for a contraction of 0.3%.
All in all, while the decrease in inflation is a positive sign, the numbers are still well above the Bank of England’s target rate of 2.0%. The UK government’s aim is to control inflation and limit it to their projection of around 5.0% by the end of the year.
https://punchng.com/uk-annual-inflation-slides-to-13-month-low/
