UK annual inflation dips to lowest in 13 months

LONDON - Agence France-Presse

Britain’s annual inflation rate eased in April to 2.4 percent, the lowest level since March 2017, official data showed on May 23, weighing on the pound.

The Consumer Prices Index 12-month rate had stood at 2.5 percent in March, the Office for National Statistics said in a statement.

Analysts had expected the rate to remain unchanged last month, but it was helped lower by cheaper air fares, the ONS added.

With inflation falling in recent months and Britain’s economic growth suffering a sharp slowdown in the first quarter amid tough Brexit talks, the Bank of England decided against raising its key interest rate earlier this month.

But with oil prices on the rise and the pound weakening, inflation risks picking up again in the coming months.

“The jump in the oil price has started to hit petrol pumps, pushing up costs for U.K. consumers and businesses alike,” said Kevin Doran, investment officer at AJ Bell.    

 “In addition, the weak pound will be driving up input costs for many U.K. companies which will ultimately filter through to U.K. consumers in the coming months.”    

The pound has slid in recent weeks, in part owing to forecasts that the Bank of England will not rush to raise borrowing costs. The data on May 23 sent it falling further.

“Inflation falling for the third month in a row further dents any hopes of a late-summer rate rise from the Bank of England,” said Ben Brettell, economist at Hargreaves Lansdown.