ONS – Inflation rises above 2% target
CPI inflation increased from 1.9% in March to 2.1% in April – above the Bank of England’s 2% target – according to the latest ONS data.
CPIH inflation, which the ONS now uses as its headline measure and includes owner occupiers’ housing costs, rose from 1.8% to 2.0% over the same period.
Rising energy prices and air fares, which were influenced by the timing of Easter, produced the largest upward contributions to change in the rate between March and April.
Phil Smeaton, chief investment officer at Sanlam UK, commented: “With progress on Brexit completely paralysed, rising inflation poses a challenge for Carney. As prices creep up above 2% target, the improvements in wages seen earlier in the year are being cancelled out.
“Uncertainty persists around the UK’s future relationship with the EU and the US trade war with China shows little sign of abating. This prompts a certain wariness about a rate increase in the short term. The unexpectedly strong performance of the UK economy, however, has increased the Bank of England’s ability to sustain an interest rate rise if it’s deemed necessary. But until Brexit clarity is finally established, Carney must continue to walk a tightrope.”
Source: Financial Reporter