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UK Inflation Levels Fall by 0.5%

The latest statistics from ONS have revealed that CPI annual inflation for April stands at 3%, down from the March figure of 3.5%.

The timing of Easter had a significant impact on the April data.

  • The annual rate was last lower in December 2009 when it was 2.9 per cent although the 3.0 per cent was equalled in February 2010. The CPI stands at 122.9 in April 2012 based on 2005 = 100
  • Air transport, off-sales of alcohol, clothing and sea transport were the most significant drivers behind the decrease in annual inflation between March and April
  • The largest upward pressures to the change in CPI annual inflation between March and April came from the operation of personal transport equipment, restaurants & hotels and rent
  • RPI annual inflation stands at 3.5 per cent in April, down from 3.6 per cent in March. The annual rate was last lower in December 2009. The largest downward pressures to the change in RPI annual inflation between March and April came from alcoholic drinks, clothing, fares & other travel and the purchase of motor vehicles.  Partially offsetting these were upward pressures from housing and petrol & oil. The RPI stands at 242.5 in April 2012 based on January 1987 = 100

KPMG Chief Economist, Andrew Smith, said:

“Amidst the gloom, some good news at last. In the face of recent hiccups, confirmation that the inflation rate has resumed its downward trend is extremely welcome – not least to the Monetary Policy Committee which has appeared increasingly stymied by the co-existence of both a weak economy and sticky prices.”

“The fall puts inflation back on track to hit the two per cent target sooner than the Bank of England’s forecast of mid-2013 and paves the way for further quantitative easing to support growth.”

“But in the meantime households continue to struggle. Real wages are still falling and the headwinds of elevated unemployment, low wage growth and high inflation look set to remain a drag on the economy for some time to come.”