Inflation has continued its journey towards the Bank of England’s 2% target, coming in at 2.3% in April, down from the 3.2% reported in March.
Measured by the consumer prices index (CPI), it is, however, slightly ahead of forecasts (2.1%).
Falling gas and electricity prices resulted in the largest downward contributions to the monthly change, while the largest, partially offsetting, upward contribution came from motor fuels. There were also large downward effects from alcohol and tobacco, food and non-alcoholic beverages, recreation and culture, and communication.
Meanwhile, core inflation, which takes out volatile factors like energy, food, alcohol and tobacco to give a clear picture of underlying trends, stood at 3.9% in the 12 months to April 2024, down from 4.2% in March.
Alpesh Paleja, CBI Lead Economist, said: “A big fall in inflation was always on the cards for April, given Ofgem’s 12% cut to the energy price cap. Households and businesses will welcome a more benign inflationary environment, but it’s worth noting that many will still be struggling with a high level of prices, particularly in food and energy bills.
“Today’s data further sets the stage for interest rate cuts in the coming months. While the Monetary Policy Committee is likely to reduce interest rates over the summer, they are still holding out for more definitive falls in measures of domestic price pressures.
“It’s encouraging that pay growth is now a touch below the Bank of England’s forecast, but there’s still a long way for it to get closer to levels consistent with inflation at target.
“The Bank will also be mindful of growing upside risks to inflation in the near-term: with the growth outlook improving at home, and tensions in the Middle East threatening to stoke commodity prices and supply pressures globally.”
