UK inflation dropped to 8.7 in April but food prices still soar

UK inflation fell last month although the reduction was less than hoped for.

The Office for National Statistics (ONS) revealed that annual inflation as measured by the consumer prices index (CPI) dropped to 8.7 per cent in April, following March’s 10.1 per cent cutback.  The rate peaked at 11.1 per cent last October.

Electricity and gas prices contributed approximately 1.4 percentage points to the fall according to the ONS.

This was partly counterbalanced by food prices which continued to rise at their fastest annual rate since 1977, with the increased cost of the weekly shop shooting up by 19 per cent in the year ending in April owing to soaring food and non-alcoholic drink prices.

Economists had predicted a larger drop to 8.2 per cent, while the Bank of England said earlier this month that it had expected inflation to fall to 8.4 per cent in April.

These latest ONS statistics were announced as analysts warned that Prime Minister Rishi Sunak’s target of halving the rate of inflation this year would be closer run than was originally envisaged.

The ONS announcement prompted financial markets to forecast that it was practically a given that the Bank of England would increase the base interest rate by a quarter-point from its current 4.5 per cent when its policymakers next meet in June.

Borrowing costs could reach almost 5.4 per cent before the end of the year, economists said.