The case in favour of rapidly falling inflation in the UK hinged on the idea that energy prices would, at some point, collapse. You’d have thought therefore that headline inflation would already be down quite some way.
The annual rate of transportation inflation — heavily influenced by changes in motor fuel prices — peaked at 15.2 per cent in June last year. Since, the rate has tumbled. The latest figures, for March, show an annual rate of a mere 1.0 per cent, the lowest since November 2020, long before Vladimir Putin’s invasion of Ukraine. Motor fuel prices themselves are now in decline, down 5.9 per cent over the last 12 months. Yet, in March, overall consumer price inflation was above 10 per cent for the seventh month in a row.
