UK inflation on the Consumer Prices Index (CPI) measure slowed to 8.7% in April, according to data released by the Office for National Statistics (ONS) this morning in line with Cebr’s forecast for the month. The rate of price growth on the CPI measure has now fallen below 10% for the first time since August 2022. Core inflation, which excludes volatile consumption categories such as food and energy, accelerated to 6.8% in April, having stood at 6.2% in March. Other measures of inflation, such as the Consumer Prices Index including owner occupiers’ housing costs (CPIH) and Retail Price Index (RPI), also decelerated sharply in April.
April marked a second consecutive month of deceleration in the CPI inflation rate.Indeed, at a decline of 1.4 percentage points, this was the largest monthly fall in the inflation rate in over 30 years. Amongst the main inflation categories, housing and household services was the main contributor to the monthly decline in the inflation rate, with price growth in April slowing to 12.3%, down from 26.1% in March. Within this category, particularly stark slowdowns in price growth were witnessed for electricity and gas. In the case of the former, price growth in April amounted to 17.3%, having stood at as high as 66.7% in March. Meanwhile, for the latter, price growth of 36.2% was witnessed in April, down from 129.4% in March. These sharp month-on-month slowdowns largely reflect a base effect from April 2022, which saw a large uplift to the Ofgem price cap and considerable upward pressure on household energy bills. However, there are nearer-term factors to consider, including recent falls in wholesale energy prices, which have contributed to slight month-on-month declines in energy prices for consumers. For instance, gas prices faced by consumers fell by 1.0% between March and April this year. Based on the trends in wholesale prices, we expect further sharp declines in energy price inflation from July onwards.