President Donald Trump gestures to Russia’s ambassador to the U.S. Sergey Kislyak as he speaks to Russian Foreign Minister Sergey Lavrov in the Oval Office Wednesday. PHOTO:AFP
British inflation hit a 3.5-year high in April, official data showed Tuesday, owing mainly to higher airfares, but also as a weak pound raises import costs.
The Consumer Price Index rallied to 2.7 percent from a rate of 2.3 percent in March, which had been also the highest level since September 2013.
“Air fares were the main contributors to the increase in the rate in April 2017, although this balanced out a downward effect of similar magnitude in March 2017 and is due to Easter falling later than last year,” the Office for National Statistics (ONS) said in a statement.
“Rising prices for clothing, vehicle excise duty and electricity also contributed to the increase in the rate.
“These upward contributions were partially offset by a fall in motor fuel prices between March 2017 and April 2017, compared with a rise between the same two months a year ago,” the ONS added.
The data failed to boost the pound as investors bet against an immediate rise for Britain’s record-low interest rate to curb prices.
“With little sign of overheating in the domestic economy, and only one (Bank of England)… member voting for higher rates at last week’s policy meeting, it seems rates will be stuck at 0.25 percent for some time,” said Ben Brettell, economist at stockbroker Hargreaves Lansdown.
Also last week, the BoE crimped its economic growth forecast, as Brexit uncertainties weigh before next month’s general election. However, the central bank suggested it could raise rates more sharply than expected if Brexit talks go smoothly and the economy remains stable.
The central bank says the inflation jump is mainly owing to a 16-percent fall in sterling since Britain’s referendum last year to leave the European Union.
“The BoE will likely have been aware of the (inflation) spike in April when it released its new forecasts and made its decision last week, so from a monetary policy perspective, little has probably changed,” said Craig Erlam, analyst at Oanda trading group.
The outlook for Britain’s economy is heavily dependent on what sort of divorce terms it reaches with the European Union and whether it can secure a trade deal. Prime Minister Theresa May has two years to thrash out an agreement with European leaders.