UK consumer inflation rises to 3 ½-year high of 2.7 percent

UK consumer inflation rises to 3 ½-year high of 2.7 percent

The findings echo official figures from the Office for National Statistics today that showed average earnings increased by 2.4 per cent in the year to March, below inflation which is running at 2.7 per cent. This is on top of rising clothing, auto tax, and electricity prices that affected overall consumer prices.

In its inflation report on Thursday, the Bank of England predicted that the CPI would hit three per cent by the end of the year. "Apart from this, inflation-impact of GST, and implementation of the pay commission and HR (house rent) allowance leave less room for a rate cut at this point of time" said Madan Sabnavis, chief economist at ratings company CARE Ltd.

Retirement income specialist, Retirement Advantage, estimates this increase in inflation will leave United Kingdom households needing to find an additional £20.2 billion to maintain their living standards.

Trades Union Congress General Secretary Frances O' Grady, on the other hand, stated that Britain could not afford another real wage slump as rising prices continue to hammer pay packets.

United Kingdom consumer inflation climbed more than expected last month amid the sharp fall in the value of the Pound caused by Britain's decision to leave the European Union.

Instead, the Bank of England has softened its previous forecasts for a rise in unemployment which it expects to stand at 4.7% this year, still above the level which it considers inflationary. Airline fares, clothes and food prices all rose during April, although there was some downward pressure thanks to a fall in the price of oil.

One-off effects aside, some see more inflation ahead.

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The downward pressure on the cost of living came from fuel pump prices, with petrol falling by 1.8p to 117.4p per litre and diesel also dropping by 1.8p to 120.3p per litre.

The pound initially spiked up after the data, hitting a one-week high of 1.2957 dollars.

Meanwhile, the average earnings index, including bonuses, rose as expected by a seasonally adjusted 2.4% in the three months to March, compared to February's gain of 2.3%.

Despite the lowest unemployment rate in more than four decades, real wages in the United Kingdom fell at their fastest rate in the first quarter of the year since 2014. In recent months, the ONS began including extended commentary on CPIH in its CPI releases, as it believes the reading is a more accurate gauge of price changes.

Prices paid by factories for materials and energy rose at the weakest annual pace since November, up 16.6 percent.

Similarly, the Urban index rose by 17.62 percent (year-on-year) in April from 18.27 percent recorded in March, and the Rural index increased by 16.69 percent in April from 16.47 percent in March.

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