The rate of inflation fell sharply in April bringing hope that the worst of the cost of living crisis may soon start to ease.
The Consumer Price Index (CPI) - the headline measure of inflation - dropped to 8.7 per cent in April from 10.1 per cent in March.
It was the first time the CPI has been below 10 per cent in eight months.
A sharp fall in the annual rate of inflation had been widely expected by economists as it is now more than a year since a huge spike in energy bills last April triggered by Russia’s invasion of Ukraine in February 2022.
However, food prices are still surging at 19.1 per cent, according to today’s data from the Office for National Statistics (ONS).
Nevertheless with earnings going up at 6.7 per cent a year in the three months to March, according to the ONS the gap between overall inflation and wages is starting to narrow. That means people are getting worse off more slowly rather than they are getting better off.
Chancellor of the Exchequer Jeremy Hunt said: “The IMF said yesterday we’ve acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast. So as well as helping families with around £3,000 of cost of living support this year and last, we must stick resolutely to the plan to get inflation down.”
Shadow Chancellor Rachel Reeves said: “As bills keep surging, families will be worried food prices and the cost of other essentials are still increasing.
“They will be asking why this Tory government still refuses to properly tackle this cost of living crisis, and why they won’t bring in a proper windfall tax on the enormous profits of oil and gas giants.
“The reality is that never have people paid so much in taxes and got so little in return.
“Our economy is constantly lurching from crisis to crisis, when we should be protecting family finances and building our national economic security here in Britain.
The easing of inflation takes some pressure off the Bank of England to raise interest rates although it still seems likely there will be one more hike in June.
The official inflation data came the day after the Bank’s Governor Andrew Bailey told MPs he believed “there are some very big lessons” to be learned in how it attempted to keep a lid on inflation after prices rose faster and stayed high far longer than forecast.
The CPI breached the 10 per cent mark last July and, apart from a one month dip to 9.9 per cent in August, has remained in double digits ever since. It peaked at 11.1 per cent in October and has not been at or below its 2 per cent target rate since April 2021.
On Tuesday, the International Monetary Fund (IMF) upgraded its forecasts for growth, saying the UK will avoid recession this year, but warned the government not to cut taxes as that would further fuel inflation.
