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UK inflation falls to 8.7% in April but high food prices persist

Inflation  A customer looks at fruit in a store in central London April 12, 2011. British interest rate futures rallied on Tuesday after a shock slowdown in inflation virtually wiped out expectations the Bank of England would raise rates in May and significantly dented the chance of an August hike too.   REUTERS/Stefan Wermuth (BRITAIN - Tags: BUSINESS)
Inflation dropped in April despite Britons continuing to struggle with high food prices. Photo: Stefan Wermuth/Reuters

UK inflation dropped to 8.7% in April as the measure of price rises slips out of double digit figures for the first time since last summer but high food prices persist.

This figure is down from the 10.1% that was recorded in March, according to the Office for National Statistic (ONS).

Read more: Interest rates may rise despite inflation falling, says Bank of England's Bailey

The sharp drop is due to the fact energy price rises are slowing from the extreme hikes seen a year ago.

However, it does not mean prices are coming down, only that they are rising less quickly.

City economists had forecast a bigger decline to 8.2%, helped by last year’s rise in household gas and electricity bills dropping out of the annual calculation for the increase in living costs.

The ONS said: "The easing in the annual inflation rate in April 2023 mainly reflected price changes in the housing and household services division, particularly for gas and electricity.

"This was offset partially by upward effects coming from recreation and culture, alcoholic beverages and tobacco, communication, and transport."

However, food and drink price inflation remains above 19%, falling a sliver from 19.2% in March to 19.1%, near its highest level in 45 years.

The ONS added: “Food and non-alcoholic beverage prices continued to rise in April and contributed to high annual inflation, however, the annual inflation rate of food and non-alcoholic beverages eased, from 19.2% in the year to March 2023, to 19.1% in the year to April 2023.”

On a monthly basis, consumer prices rose by 1.2%, above a consensus estimate of 0.8%.

More worrying for price stability is that core inflation, excluding food, alcohol, tobacco and energy prices, jumped from 6.2% to 6.8%, underlining the danger that high inflation remains persistent in the UK.

Inflation is the increase in the price of something over time. If a bottle of milk costs £1 but £1.05 a year later, then annual milk inflation is 5%.

The 8.7% figure in the UK is higher than 7.6% in Germany, 6.9% in France, 4.4% in Canada 3.8% in the US and 3.4% in Japan. It is lower than Italy's figure of 8.8%, however with the overall EU27 figure standing at 8.1%.

Read more: UK households paying an extra £833 on groceries as food inflation remains high

Chancellor 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."

UK inflation has remained stubbornly high even as the economy has defied expectations for a recession, prompting the Bank of England to hike interest rates for the 12th consecutive time to 4.5% at its last meeting earlier this month.

There is much speculation on whether Bank rate will be raised further next month following 12 consecutive increases.

Rocio Concha, Which? director of Policy and Advocacy, said: “With food prices still very high, millions of desperate parents and people on low incomes have no choice but to resort to more extreme measures such as skipping meals in order to provide for their loved ones.

“Supermarkets should make it easier for people by urgently committing to stocking essential budget ranges in all their stores, particularly in areas where people are most in need. Clearer pricing is also vital in enabling shoppers to compare prices and find the best value products, so it's good to see the government committing to reviewing pricing rules, but this must be undertaken quickly.”

Alice Haine, personal finance analyst at Bestinvest, said: "Softening inflation, particularly a figure under 10%, is better news for budgets relentlessly battered by the cost-of-living crisis over the past 18 months. But consumers would be wise to remember that while inflation is falling, prices are still up by 8.7% compared to a year ago with the only consolation that the pace of those prices rises is slowing compared to previous months."

Watch: How does inflation affect interest rates?

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