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U.K. headline consumer price inflation accelerates in April
The consumer price inflation in U.K. accelerated above the Bank of England’s target rate in April. The headline inflation accelerated to 2.1 percent on a year-on-year basis, modestly lower than the median expectations of a rise to 2.2 percent. Most of the upward influences to April inflation had been flagged in advance, noted Lloyds Bank in a research report.
The implementation of OFGEM’s latest energy price cap change led to rise in electricity and gas prices by 10.9 percent and 9.3 percent respectively, compared to modest rises in April 2018. In the meantime, motor fuel prices rose 2.6 percent sequentially in April, compared to a 1.2 percent sequential rise last year. However, the big surprise came from the scale of the pick-up in airfares.
Airfare prices rose around Easter time. However, there had been some suggestion that lower demand for flights, especially to European destinations might have restricted airlines’ ability to raise prices. The impact of these three effects alone should have pushed the headline rate of CPI up by 0.6 percentage points. This was partly countered by considerable downward influences from a number of other areas of the inflation basket.
The ONS stated that these were evident in categories including food and non-alcoholic drinks, alcoholic beverages and tobacco, clothing and footwear, and restaurants and hotels. Nevertheless, the strongest downward influence came from recreation and culture items, where prices dropped 0.8 percent sequentially compared with a rise of 0.4 percent in April, and largely reflected lower prices for computer games. The core rate, which strips food, energy, alcohol and tobacco, held stable last month at 1.8 percent year-on-year.
The RPI inflation accelerated to 3 percent year-on-year from 2.4 percent, coming above market expectations of a rise to 2.8 percent year-on-year.
At 17:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bearish at -65.5722 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 25.8659 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex