LONDON (Reuters) – Britain’s consumer price inflation fell by less-than-expected in April, raising fresh doubt about the Bank of England’s plans to cut interest rates in the coming months which would give a boost to embattled Prime Minister Rishi Sunak.
British consumer prices rose by an annual 2.3%, down from a 3.2% increase in March and its lowest since July 2021 when it stood at 2.0%, the Office for National Statistics said.
The BoE – which has an inflation target of 2% – and economists polled by Reuters had forecast a bigger drop to 2.1%.
Services inflation, closely watched by the BoE as a gauge of domestically generated price pressure, also came in stronger than expected at 5.9%. The BoE’s forecasts and the Reuters poll had pointed to a reading of 5.5%.
Sterling rose after the data.
Transitioning to potential causes, one factor contributing to the less-than-expected decline could be rising costs in certain sectors. Supply chain disruptions and increased transportation expenses may have offset any downward pressure on prices.
Additionally, fluctuations in global commodity markets, particularly in energy and food prices, could have influenced the inflation trajectory.
Moreover, policymakers and economists are closely monitoring the situation to discern whether the April data is indicative of a broader trend. The UK Inflation Rate is a crucial economic indicator, impacting monetary policy decisions and consumer sentiment.
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