1 of 3 | Britain's Office for National Statistics said Wednesday that the country's annual inflation rate dropped into single digits in April for the first time in eight months. File Photo by Hugo Philpott/UPI |
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May 24 (UPI) -- Britain's inflation rate dropped sharply into single-digit territory in April as falling energy costs fed through into prices but food inflation remained stubbornly high, the country's main statistical agency said Wednesday.
The benchmark Consumer Price Index showed that annual inflation came in at 8.7% down from 10.1% in March, its lowest level since March 2022, as energy price hikes sparked by Russia's invasion of Ukraine dropped out of the calculations, according to the Office for National Statistics' latest bulletin.
The 1.4% fall in the headline rate was due to the rate at which prices were rising slowing to 1.2% on the month, compared with a rise of 2.5% a year earlier, driven by falling gas and electricity costs which were offset in part by higher costs in recreation and culture, alcoholic beverages and tobacco, communication and transport.
However, the pace at which food and non-alcoholic drink prices rose eased by just 0.1% to 19.1% while core inflation -- the most important measure when it comes to setting interest rates -- jumped 0.6% to 6.8%, its highest rate since March 1992.
"The rate of inflation fell notably as the large energy price rises seen last year were not repeated this April, but was partially offset by increases in the cost of second-hand cars and cigarettes," ONS Chief Economist Grant Fitzner said in a Twitter post.
"However, prices in general remain substantially higher than they were this time last year, with annual food inflation near historic highs."
Services inflation rose from 6.6% to 6.9% driven by higher wages companies have been forced to offer in the face of industrial action and to counter labor shortages, sparking fears inflation may be becoming embedded in the economy.
Chancellor Jeremy Hunt pledged he would "be relentless in sticking to the plan to bring down inflation" that he blamed for strikes and putting families under "enormous pressure."
"We have to bring it down, there's no two ways about it. What it also shows the economy is growing faster than people predicted. So what we want to do is to get the benefits of growth without inflation."
But the Labor opposition said the inflation figures showed the Conservative government was letting people down by failing to address a real cost of living crisis.
"The reality of today's inflation figures are soaring food prices staying high and hitting families hard," Shadow Chancellor Rachel Reeves said on Twitter.
"After 13 years of Tory government, never have people paid so much but got so little in return. Labor will protect family finances and build our economic security."
The IMF on Tuesday reversed course in its outlook for the British economy saying it would now avoid the recession the fund had predicted for this year with modest GDP growth of 0.4% which together with high inflation means the Bank of England's latest 0.5% interest rate hike earlier this month, its 12th straight hike in a row, is unlikely to be its last.