The UK inflation at its lowest in over two years

Annual rate on the consumer prices index drops to 3 per cent.

Sterling notes and coins. Credit: Getty Images

The UK’s rating on the all-items consumer prices index (CPI), which measures changes in the prices of consumer goods and services, reached 122.9 points (based on 2005=100) in April, a decrease of 3.0 per cent compared to the previous month. 

According to figures released today by the Office for National Statistics (ONS), the annual rate for CPI is 3.0 per cent, down from 3.5 per cent last month. 

Meanwhile, core CPI fell to 2.1 per cent, its lowest in over two years.

Large downward effects came from transport, alcoholic beverages, tobacco, clothing and footwear. Smaller upward pressures came from personal transport equipment, restaurants & hotels and rents.

The all-items retail prices index (RPI), which measures the change in the cost of a basket of retail goods and services, reached 242.5 in April (based on January 1987=100), up from 240.8 in March.

The CPI all goods index is 119.0, up from 118.7 in March, while the CPI all services index is 127.7, up from 126.5.

In the recent inflation report, the Bank of England (BoE) governor, Mervyn King, said that CPI inflation would remain above 2 per cent for next two years.

The Financial Times quoted Jason Conibear, director at the forex specialists Cambridge Mercantile Group:

That inflation has nudged down will be of great relief to the Bank of England but it’s a meagre ray of light in a darkening economic environment. Last week, the Bank of England said inflation would be hitting target a lot later than expected and there’s no doubt we can expect a bumpy ride on the way down.