Belfast Telegraph

Shock as inflation falls to a 13-month low

But homes still feeling the strain, say experts

By Emma Deighan

Inflation fell to its lowest level in 13 months in April, but the pressure on household budgets remains, according to official statistics.

Figures from the Office for National Statistics (ONS) showed the Consumer Price Index (CPI) fell to 2.4% last month, down from 2.5% in March.

Economists had been expecting inflation to stay steady at 2.5%.

The Government's sugar tax came into effect on April 6, pushing up soft drink prices, which saw their biggest ever rise for this time of year, up a record 2.8% month-on-month and 6.2% year-on-year.

Mike Hardie, head of inflation at the ONS, said: "Inflation continued to slow in April, with air fares making the biggest downward contribution due to the timing of Easter.

"This was partially offset by the rise in petrol prices. Soft drink prices saw their biggest ever rise for this time of year due to the introduction of the sugar tax.

"However, many retailers still haven't passed the impact of the tax on to shoppers."

Petrol prices rose by 1.5p per litre between March and April, while diesel lifted by 1.6p per litre, compared to a 1.8p per litre fall for both a year earlier.

Economists are expecting oil prices to rise further over the summer after Brent crude surged above 80 US dollars per barrel last week.

Hauliers have warned that they will have little option but to pass the rising costs on to customers.

It is feared this could put a further squeeze on households - potentially pushing inflation back up.

Ulster Bank economist Richard Ramsey said: "In light of the fact that the price of necessities including utility bills, motoring costs, rates bills and private sector rents (for Northern Ireland) are all rising at substantial rates and above the headline rate of inflation, it is perhaps premature to talk of a meaningful end to the cost of living squeeze.

"While slower rates of inflation are always welcome, higher wage growth and a more marked pick-up in real disposable incomes are required.

"Increasing productivity is central to this goal."

Danske Bank's chief economist Conor Lambe said the fall in inflation was "a further sign that the squeeze on UK consumers is gradually easing".

But he added that inflation had further to fall before it returned to the Bank of England's 2% target rate and real wage growth remained modest.

Mr Lambe said: "The data is moving in the right direction for consumers, but the pressure on household budgets remains a constraining factor on the prospects for both the UK and Northern Ireland economies."

Belfast Telegraph

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