UK inflation continued to slow to reach a 13-month low in April, driven by air fares, adding doubts about the timing of the next rate hike by the Bank of England.
Consumer prices climbed 2.4 percent year-on-year in April, slightly slower than the 2.5 percent increase seen in March, the Office for National Statistics reported Wednesday.
This was the lowest since March 2017, when the rate was 2.3 percent. Inflation was expected to remain unchanged at 2.5 percent.
Month-on-month, consumer prices gained 0.4 percent compared to the expected increase of 0.5 percent.
Core inflation that excludes energy, food, alcoholic beverages and tobacco, slowed to 2.1 percent from 2.3 percent a month ago.
Due to the timing of Easter, air fares provided the largest downward contribution, which was partially offset by the rise in motor fuels cost.
A rate hike in August still looks a close run thing, Ruth Gregory, an economist at Capital Economics, said. “But provided that activity data rebounds in the second quarter as we expect, today’s figures haven’t altered our view that it is still a little bit more likely than not.”
At the Treasury Committee hearing, BoE Governor Mark Carney said that the interest rates are set to rise at a gentle pace and the slowdown seen in the first quarter was temporary.
Another report from the ONS showed that output price inflation held steady at 2.7 percent in April. Economists had forecast inflation to slow to 2.3 percent. Monthly increase in output prices also remained unchanged at 0.3 percent.
Meanwhile, input price inflation rose to a four-month high of 5.3 percent in April from 4.4 percent in March. Nonetheless, this was slower than the expected 5.9 percent.
On a monthly basis, input prices climbed 0.4 percent after gaining 0.1 percent. Prices were expected to rise 1 percent.