Inflation at its lowest level in over two years
INFLATION fell back into its target bracket last month for the first time in over two years, official data showed yesterday, saving Bank of England governor Mervyn King from writing yet another letter of explanation to the chancellor.
Consumer prices rose three per cent in the year to April, down from 3.5 per cent in March and the lowest level since February 2010.
CPI inflation is now within one percentage point of the Bank’s two per cent target, while core inflation fell from 2.5 per cent to 2.1 per cent.
Transport prices rose 1.2 per cent on the month, down from the 2.4 per cent increase in the same period last year, dragging down the headline figure.
Alcohol and tobacco jumped 2.9 per cent, in part due to rising taxes, but that is also well down on the record 5.3 per cent rise a year earlier, also pulling down the main number.
The cost of living measured on the retail price index (RPI) fell more slowly, from 3.6 per cent in March to 3.5 per cent in April, while the tax and price index (TPI) rose by 3.1 per cent, down from 3.3 per cent.
“It is encouraging that the fall was driven by a drop in core inflation,” said Capital Economics’ Vicky Redwood. “We expect inflation to be below target before this year is out.”