Inflation slides to lowest level for a year

Inflation slides to lowest level for a year

Inflation slides to lowest level for a year

Mr Hardie added: "Growth in the price of goods leaving factories continued to slow, mainly due to a smaller increase in the price of food products compared with this time previous year".

"However, even this won't offer much succour to savers as any rises are likely to be modest and certainly nowhere near enough to cancel out inflation".

United Kingdom inflation unexpectedly fell last month to its lowest level in a year, casting doubt over whether the Bank of England will raise interest rates next month.

Food prices rose 0.3% compared with a month earlier, versus a 0.6% rise over the same period in 2017, with fruit and fish applying the most downward pressure, having fallen 1.4% and 1.3% respectively.

The Office for National Statistics (ONS) said today that women's clothing prices rose at a slower than usual pace in March.

"Inflation looks to be falling back as predicted, but with wages picking up and unemployment still falling, it's possible this tightness in the labour market could eventually push inflation back up".

"We know that inflation should ease over the course of this year; if consumption also falls or stagnates, the justification for higher rates could begin to erode quite quickly".

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Annual pay growth excluding bonuses picked up to 2.8 percent from 2.6 percent, its highest since the three months to August 2015, and April data should reflect an increase in the minimum wage and some public-sector salaries.

The rate was even lower, according to the newer ONS measure of inflation, CPIH, which includes owner-occupiers' housings costs.

While investors are still pricing in an interest rate hike by the Bank of England in May, the surprise fall in inflation has led some to reassess the prospects of a further rise in November.

While on the surface these two data points combined look like good news, Ben Brettell, a senior economist at FTSE 100 investment firm Hargreaves Lansdown believes it is a little more complicated.

'These positive signs of a strengthening economy could be all the BoE needs to pull the interest rate lever in May - moving policy back towards monetary normalisation, ' says Smeaton.

"The interplay between wages and prices will be interesting over the coming months".

Sterling's 14 per cent gain over the past year has helped to suppress inflation, reversing some of the impact of the currency's decline in 2016. This undermines the case for the BoE raising rates.

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