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UK consumer prices see bigger rate fall
By Sumeet Desai |
May 20, 2009, Wednesday
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Print Edition
Print Edition
CONSUMER price inflation in the United Kingdom fell more than expected in April to its lowest level in more than a year because of declining food and energy costs, official data showed yesterday.
The Office for National Statistics said consumer prices rose 0.2 percent on the month, bringing the annual rate down to 2.3 percent from 2.9 in March. That was the lowest since January 2008 and below analysts' expectations of 2.4 percent.
The broader Retail Prices Index, the most familiar general purpose domestic measure of inflation in the UK, and on which many wage deals are based and also includes falling mortgage interest payments, fell to 1.2 percent, the lowest since records began in June 1948.
The CPI measure remains above the Bank of England's 2 percent target but policy makers are expecting further sharp declines in inflation and are more focused on reviving growth in an economy that is on track to shrink this year at its fastest since World War II.
"We're encouraged inflation is starting to come down a little bit quicker and expect it to fall further in the coming six months and fall below 1 percent over that period," said David Page, an economist at Investec.
June gilt futures pared losses after the weaker-than-expected data. The pound was little changed.
The statistics office said the biggest downward effect on CPI inflation came from electricity and gas bills as providers cut prices following last year's record jumps.
Food also had a major downward effect with meat and vegetable prices falling this year compared with increases a year ago. There had been some concern that food prices would keep pushing up inflation given the weakness of the pound.
The Office for National Statistics said consumer prices rose 0.2 percent on the month, bringing the annual rate down to 2.3 percent from 2.9 in March. That was the lowest since January 2008 and below analysts' expectations of 2.4 percent.
The broader Retail Prices Index, the most familiar general purpose domestic measure of inflation in the UK, and on which many wage deals are based and also includes falling mortgage interest payments, fell to 1.2 percent, the lowest since records began in June 1948.
The CPI measure remains above the Bank of England's 2 percent target but policy makers are expecting further sharp declines in inflation and are more focused on reviving growth in an economy that is on track to shrink this year at its fastest since World War II.
"We're encouraged inflation is starting to come down a little bit quicker and expect it to fall further in the coming six months and fall below 1 percent over that period," said David Page, an economist at Investec.
June gilt futures pared losses after the weaker-than-expected data. The pound was little changed.
The statistics office said the biggest downward effect on CPI inflation came from electricity and gas bills as providers cut prices following last year's record jumps.
Food also had a major downward effect with meat and vegetable prices falling this year compared with increases a year ago. There had been some concern that food prices would keep pushing up inflation given the weakness of the pound.
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