The rate of inflation has finally fallen back into single digits and eased to its lowest level since March last year, new figures show.
The Office for National Statistics (ONS) said that Consumer Prices Index (CPI) inflation fell to 8.7% in April - down from 10.1% in March. The decline in CPI was largely driven by gas and electricity costs remaining stable last month, meaning last year’s energy price hikes were not repeated.
In April last year the energy price cap lifted by 54% to £1,971 due to the impact of Russia’s invasion of Ukraine on gas and electricity supplies, but this year the Energy Price Guarantee (EPG) has been kept at £2,500 since last October.
Ofgem is set to confirm on Thursday (25 May) that energy prices will fall sharply for households in July, when the current EPG comes to an end. Forecasters at Cornwall Insight are expecting the price cap to fall to £2,053.77, below the EPG for the first time since it was introduced last October.
Despite easing into single digits, the inflation rate still remained higher than was forecast by economists who had expected a drop to 8.2% last month, while the Bank of England forecast 8.4%.
Inflation remained higher than expected as food prices have continued to rise at a near record pace, with figures showing food CPI inflation at 19.3% - down only slightly on March’s eye-watering 19.6%.
ONS chief economist Grant Fitzner said: “The rate of inflation fell notably as the large energy price rises seen last year were not repeated this April, but was offset partially by increases in the cost of second-hand cars and cigarettes. However, prices in general remain substantially higher than they were this time last year, with annual food price inflation near historic highs.”
Responding to the latest figures, Chancellor Jeremy Hunt said that while it is “positive” to see inflation ease to single digits, “food prices are still rising too fast”. He added: “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 hit out at the Tory government for ‘refusing’ to tackle the cost of living crisis, leaving families struggling with essential costs. She 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. Labour’s mission to secure the highest sustained growth in the G7 will make families across every part of our country better off.”
The ONS figures come after the Bank of England’s top bosses admitted to MPs on Tuesday (23 May) that it made errors in its forecasting of UK inflation, but governor Andrew Bailey insisted that inflation had “turned the corner”.
It predicted earlier this month that inflation would fall to 5.1% in the fourth quarter of 2023, narrowly seeing the government hit its target to halve inflation by the end of the year.
The latest data also showed the CPI measure of inflation including housing costs (CPIH) fell to 7.8% in April from 8.9% in March, while the Retail Prices Index (RPI) slowed to 11.4% from 13.5% in March.