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April inflation hits 1.8pc

Sarah Davidson

May 20, 2014

Transport costs such as air fares, sea fares and motor fuels have significantly contributed to the rising rate, while the largest offsetting factor was the tumbling price of food.

Frances O’Grady, TUC general secretary, said: “Last month we were told the living standards crisis was over. Yet one month later real wages are falling again. Even on a measure that excludes the cost of housing, prices are rising faster than wage packets.

“It will be years before workers even recover the earnings they have lost since 2008 let alone start to feel any better off. A real recovery where decent jobs provide fair wages, security and future prospects remains a distant goal.”

But Samuel Tombs, UK economist at Capital Economics, said: “The increase in CPI inflation from 1.6% to 1.8% in April and core inflation from 1.6% to 2% almost entirely reflects the impact of the later timing of Easter, which fell in April this year but was in March last year.

“This meant that prices for many goods such as airfares in April 2014 which were boosted by the Easter holidays were compared to a normal level of prices in April 2013. Clearly, this boost to the annual inflation rate will unwind next month.”

Clothing and footwear prices increased between March and April 2014, while alcohol and tobacco prices rose at a slower rate than a year ago.

Tombs added: “The trend in CPI inflation should still be down over the course of the rest of 2014 thanks to the recent stability of commodity prices, sharp falls in import prices and the intensification of competition between supermarkets and retailers.

“We continue to think that CPI inflation should ease to as low as 1% by the end of this year and remain comfortably below the 2% target in 2015.”


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