UK consumer prices increase 2.7% in April
BRITISH inflation hit its highest level since September 2013 last month, building on its sharp rise since the vote to leave the EU and tightening the squeeze on living costs for households ahead of a national election on June 8.
Consumer prices rose in April by an annual 2.7 percent, the Office for National Statistics said yesterday, and economists said inflation would climb further as the fall in the value of the pound since the Brexit vote pushes up the cost of imports.
Economists had predicted a rise of 2.6 percent.
Much of the rise last month was due to the late timing of the Easter holiday, which pushed up airfares. But the combination of sterling’s fall and higher oil prices are pushing up inflation across the board for consumers and businesses.
Challenging
Last week, Bank of England governor Mark Carney warned that this year would be challenging for consumers, saying that wages were about to fall in real, inflation-adjusted terms.
The head of Britain’s biggest trade union group yesterday said the inflation data meant living standards should be front and centre of the election campaign.
“The last thing Britain needs is another real wage slump. But rising prices are hammering pay packets,” Trades Union Congress general secretary Frances O’Grady said.
“Working people are still £20 (R342) a week worse off, on average, than they were before the (financial) crash. That’s why living standards must be a key battleground at this election.”
Prime Minister Theresa May is widely expected to defeat the opposition Labour Party, which is calling for an end to strict limits on public sector pay growth and a higher minimum wage.
Despite the inflation rise, however, the economy is far from overheating – meaning that all but one of the Band of England’s eight policymakers voted last week to keep interest rates on hold.
The latest inflation figures were boosted most of all by rising airfares during the Easter holidays, which last year took place in March. Rising clothing prices, and higher car taxes and electricity also pushed up consumer prices.
One-off effects aside, some see more inflation ahead.
“We remain convinced that the market is underestimating the further upside for inflation from here,” Scotiabank analyst Alan Clarke said, adding that he expected utility bills, food costs and the weak pound to put more pressure on prices in future.
Expected rate of UK inflation by the year’s end