Economists polled by Reuters had expected the annual rate to fall to 8.2% in April, further from the 41-year October high of 11.1%, but still weighing heavily on workers’ purchasing power. whose wages are increasing at a lower rate.
On the other hand, a Bloomberg survey predicted that the consumer price index in Britain will fall to 8.2% in April 2023, from 10.1% last March, and this could be the fastest fall in 30 years, giving UK households a chance to breathe in the face of the worst wave of inflation generations ago.
For his part, British Finance Minister Jeremy Hunt on Wednesday reiterated the need to adhere to the government’s plan to reduce inflation, after official data showed a decline in price increases in April.
“While it is positive that (inflation) is now in single digits, food prices continue to rise very rapidly,” Hunt said in a statement. “We must firmly adhere to the plan to reduce inflation.”
These figures are likely to fuel market expectations that the Bank of England will extend the cycle of interest rate hikes over the summer to eliminate price pressures, as the most worrying figures for the Britain’s central bank resided in the unexpected acceleration in core inflation – which excludes volatile food and energy prices, to 6.8% from 6.2% in March.
The Office for National Statistics said the drop in inflation was mainly due to gas and electricity costs, which remained stable in April compared to the unprecedented jump recorded in the same month last year.
In April 2022, the energy price cap was raised by 54% to £1,971 to reflect, for the first time, the impact of the Russian war in Ukraine on European gas and electricity supply.
Energy costs have been the main source of the cost of living crisis since the Ukraine crisis, driving up not only household energy bills but also manufacturing and transportation prices.
Bank of England Governor Andrew Bailey recently confirmed that the monetary policy committee would adjust interest rates if necessary to bring inflation back to a sustainable medium-term target.
Bailey added that the central bank is looking for “evidence” that inflation is falling before it can “take a break” from the most aggressive monetary policy cycle in four decades.
Earlier this month, a majority of the Bank of England’s Monetary Policy Committee voted to raise interest rates from 4.25% to 4.5%. The bank said in a statement that the inflation rate is expected to decline at a slower pace than expected, given the continued rise in food prices.
This is the 12th increase approved by the bank for interest. The bank added that the rise in food prices has lasted longer than expected, partly because of the Russian war in Ukraine and crop failures in European countries.
The Bank of England expects UK inflation to fall sharply throughout 2023, but is concerned about continued price pressures even after the sharp fall in energy prices.
Grocery bills have kept inflation high, the economy has been more resilient than expected and the labor market remains very tight, adding to wage pressures.
Prime Minister Rishi Sunak has promised to halve inflation this year. Expectations were comfortably met when set in January, but inflation has been more consistent than expected by the BoE, surprisingly rising in each of the past two months.
Meanwhile, the International Monetary Fund on Tuesday expected Britain’s economy to grow around 0.4% for the rest of this year, indicating expectations come in light of unexpected flexibility in demand rate, supported by high wages and low energy prices. .
The Fund previously expected the UK economy to contract by around 0.3% in the current year, and according to expectations last April, Britain will overtake Germany in terms of growth rate, as the latter’s economy will contract by 0.1% in 2023, and the Fund expects UK GDP growth to accelerate to 1% in 2024.
Read the Latest World News Today on The Eastern Herald.
