inflation

The UK inflation rate, as measured by the Consumer Prices Index (CPI), has risen for the first time in ten months from 1.6% in March to 1.8% in April, according to the Office for National Statistics (ONS).

The ONS also reported that the rate of inflation as measured by the Retail Prices Index (RPI) was unchanged at 2.5%.

Samuel Tombs, analyst at Capital Economics, said:

“Prices for many goods – such as airfares – were boosted by the Easter holidays compared to a normal level of prices in April 2013. Clearly, this boost to the annual inflation rate will unwind next month.”

The cost of petrol is higher than this time last year, but this has been offset by a fall in the cost of food.

Despite the increase, the rate of inflation is still below the Bank of England’s 2% target for inflation.

However, with pay only increasing by 1.7% in March, experts say this could indicate a renewed squeeze on real earnings.

Howard Archer of IHS Global Insight told The Guardian:

“We doubt that earnings growth will race ahead. Companies are still keen to contain their costs in an ongoing competitive environment while still appreciable labour market slack limits workers’ ability to push for higher pay.

“Limited productivity growth may also limit wage growth.”

Image by Charley Lhasa