Economy  

Inflation surges to four-year high in April

Inflation surges to four-year high in April

CPI inflation rose sharply to 2.7 per cent in April, its highest level since 2013, as higher airfares pushed the figure up beyond economists' estimates.

April's 0.4 percentage point increase takes the figure well beyond the Bank of England's 2 per cent target, and above expectations of a rise to 2.6 per cent - though the number is broadly in line with central bank projections released last week.

It comes after March's figure had remained flat month on month, at 2.3 per cent, after a later-than-normal Easter meant a subdued impact from rising airfares.

The Office for National Statistics (ONS) said the airfare quirk that held March's figure back was the biggest factor in the April rise. However, inflationary pressure also came from clothing and energy costs, with none of the 13 categories of products and services witnessing price falls.

Food inflation was up to 1.5 per cent, 0.3 percentage points higher than March.

Aside from the headline figure, core inflation - which strips out more volatile products and services - rose sharply to 2.4 per cent up, from 1.8 per cent in March, and was also above consensus.

Capital Economics said April showed further signs that increased import costs deriving from sterling weakness were being passed on to consumers.

But Scott Bowman, UK economist, added "There are few signs of domestic cost pressures building. And with the fall back in producer input price inflation over each of the past three months suggesting that the exchange rate pass through will be less protracted than usual, we think that inflation will drift back towards the target thereafter and the squeeze on real wages won’t be too severe."

Last week, the BoE kept interest rates unchanged although one Monetary Policy Committee member voted for an increase. Few economists believe the Bank is in any hurry to raise rates.

The ONS's official measure of inflation, CPIH - which includes housing costs and superseded CPI in its calculations in February - rose from 2.3 per cent in March to 2.6 per cent in April.