Consumer inflation continues to fall

CPI annual inflation – the Government's target measure – was 2.3 per cent in April, down from 2.9 per cent in March, according to the Office for National Statistics (ONS).

The largest downward pressure affecting the change in the CPI annual rate was from housing and household services. This was principally due to electricity and gas bills which fell this year but rose a year ago. Also housing rents and water and sewerage charges rose by less than a year ago.

There were further large downward pressures from:

Food and non-alcoholic beverages with large effects from vegetables and meat where prices fell this year but rose a year ago.

Alcoholic beverages and tobacco where prices rose last year, mainly reflecting an increase in excise duty, whereas this year's rise in excise duty takes effect a month later.

Restaurants and hotels where prices rose by less than a year ago. Last year's price rise was partly due to an increase in excise duty on alcohol.

Miscellaneous goods and services where mortgage arrangement fees fell this year but rose a year ago.

Recreation and culture, principally due to games, toys and hobbies where prices fell this year but rose a year ago, particularly for computer games.

A large upward pressure affecting the change in the CPI annual rate contribution came from transport costs due to purchase of vehicles, fuels and lubricants, and air transport. Car prices rose this year but were little changed a year ago, principally due to the price of second-hand cars. The price of fuels and lubricants rose by more than a year ago. The average price of petrol rose by
4.0 pence per litre between March and April this year, to stand at 94.4 pence, compared with a rise of 1.9 pence last year. This year's price rise incorporates an increase in excise duty which took effect from 1 April.

There was a further large upward pressure from communication, principally telephone equipment and services. Landline telephone charges rose by more than a year ago and the price of mobile phone handsets rose this year but fell a year ago.

RPI inflation was -1.2 per cent in April, that is a fall of 1.2 per cent on the year, compared with -0.4 per cent in March. The main factors affecting the CPI also affected the RPI. Additionally, there was a large downward pressure from housing where the largest effect came from mortgage interest payments following March's half point decrease in the Bank rate from 1.0 per cent to
0.5 per cent. There were also downward effects from house depreciation, rent, council tax and dwelling insurance. All of these housing components, except for rent, are excluded from the CPI.

RPIX inflation – the all items in RPI excluding mortgage interest payments – was 1.7 per cent in April, down from 2.2 per cent in March.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in March, at 2.9 per cent, was above the provisional figure for the European Union as a whole of 1.3 per cent.