LONDON — UK inflation jumped again in April, climbing to its highest level since the summer of 2013, as the impact of the falling pound continues to filter through to the cost of goods in Britain.
The ONS said that the UK’s consumer price index — the key measure of inflation — was 2.7%, up from 2.3% in March, and above the 2.6% forecast by economists before the release.
Core inflation figures, which strip out volatile goods like oil and food, actually fell, dropping from 2.0% in February, to 1.8% in March.
CPIH — which includes CPI and owner occupiers housing costs — hit 2.6% in the month, again up significantly from March. In recent months, the ONS began including extended commentary on CPIH in its CPI releases, as it believes the reading is a more accurate gauge of price changes.
“The different timing of Easter in 2016 and 2017 contributed to air fares being the main contributor to the increase in the 12-month rate of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) between March 2017 and April 2017,” the ONS said in a release.
Here’s the ONS’ chart, showing the figures as part of the longer term trend:
Since the Brexit vote, inflation has jumped, thanks largely to the fall in the value of the pound since the vote. The jump accelerated following the Bank of England’s decision to cut interest rates in August.
Last week, the bank reaffirmed its belief that inflation will peak at 2.8% this year, reaching that mark in the fourth quarter.
“CPI inflation has risen above the MPC’s 2% target as the depreciation of sterling has begun to feed through to consumer prices,” it said in its May Inflation Report.
“This impact has been offset to some extent by continued subdued growth in domestic costs. In particular, wage growth has been notably weaker than expected. The MPC expects inflation to rise further above the target in the coming months, peaking a little below 3% in the fourth quarter.”
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