UK inflation rate hits 3.7 per cent

CPI annual inflation, the Government’s target measure, was 3.7 per cent in April, up from 3.4 per cent in March.

The largest upward pressures to the change in the CPI annual rate between March and April came from:

clothing and footwear where prices, overall, rose by 2.2 per cent between March and April this year but rose by only 0.2 per cent a year ago; this was mainly due to garments and, in particular, women’s clothing.

food and non-alcoholic beverages, mainly due to the food component where upward effects were widespread rather than from one particular food group. Reports have suggested that the closure of European airspace as a result of the Icelandic volcano had a limited impact on food prices in April.

alcoholic beverages and tobacco where prices, overall, rose by 2.1 per cent between March and April this year (driven by the increases in excise duty that came into force towards the end of March) but were unchanged a year ago.

The only large downward pressure to the change in CPI annual inflation between March and April came from furniture, household equipment and maintenance where prices, overall, fell by more than a year ago with the main downward effects coming from furniture items and cleaning products.

In the year to April, RPI annual inflation was 5.3 per cent (the highest since July 1991), up from 4.4 per cent in March. The main factors affecting the CPI also affected the RPI. Additionally there was significant upward pressure to the change in the RPI annual rate from housing. This was driven by mortgage interest payments which rose by 0.6 per cent this year but fell by 7.7 per cent a year ago, following the half point decrease in the Bank rate from 1.0 per cent to 0.5 per cent in March 2009.

RPIX inflation – the all items RPI excluding mortgage interest payments – was 5.4 per cent in April, up from 4.8 per cent in March.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in March was above the provisional figure for the European Union. The UK rate was 3.4 per cent whereas the EU’s as a whole was 1.9 per cent.