FX.co ★ UK Inflation Weakest Since Mid-2021

Consumer price inflation in the UK has dipped to its lowest level since July 2021, according to data released by the Office for National Statistics (ONS) on Wednesday. In April, consumer prices rose by 2.3% year-on-year, a deceleration from the 3.2% increase observed in March. Nonetheless, this figure surpassed economists' predictions of a 2.1% rise.

The April inflation rate marks the weakest since July 2021, when it stood at 2.0%.

On a month-to-month basis, the consumer price index saw a 0.3% increase, following a 0.6% rise in the previous month. Economists had forecast a more modest 0.2% gain for April.

Core inflation, which strips out volatile items such as energy, food, alcohol, and tobacco, eased to 3.9% from 4.2% in March but still exceeded the forecast of 3.6%.

The ONS attributed the largest downward contributions to the change in annual CPI rates to falling gas and electricity prices. By contrast, motor fuel prices, which rose this year compared to a decline in the same period last year, contributed positively to inflation.

Another ONS report highlighted that output price inflation reached its highest level since May 2023. Output prices climbed by 1.1%, up from a 0.7% increase in March, while monthly inflation remained steady at 0.2%.

April marked the eleventh consecutive month of declining input prices, which fell by 1.6% annually following a 2.5% drop in March. The monthly input Producer Price Index (PPI) inflation rate was 0.6% in April, despite a revised 0.2% fall in March.