CPI inflation fell sharply to 2.3% in April, above expectations of 2.1%.
Prices were up 0.3% in a month (compared to 1.2% a year earlier).
CPI is the lowest since
The biggest factor pushing inflation down was energy prices, followed by food, and the biggest push in the opposite direction came at the petrol pumps.
Core CPI inflation (stripping out energy, food, alcohol and tobacco) was 3.9%, down from 4.2% in March.
The CPI services rate eased from 6% to 5.9%.
What it means for interest rates.
What moved inflation this month.
What it means for homeowners.
What it means for savings.
What it means for annuities.
The ONS has released inflation figures for April: Consumer price inflation,
But it was the outbreak of the war in
As interest rates have shot up, putting a vice-like grip on household budgets, demand has been squeezed out of the economy, but external inflationary pressures like energy costs have also eased off. Even though inflation coming close to target is clearly highly welcome, it doesnt automatically mean inflation has been relegated from the league of threats.
It looks increasingly likely that a rate cut may still not come until August. Even so,its more stable ground for investors in the
It's worth noting that were expecting another cut in July to around 1,574. However, this is actually going to help push inflation higher, because well be comparing it to a year earlier, when the price cap was 2,074. So this summer we can look forward to the odd combination of falling energy prices actually pushing inflation up.
Food prices continued to feed lower inflation with prices up just 2.9% in a year down from 4% a month earlier, and from a high of 19.2% in
The typical trolley will contain a mixture of price movements. Milk, butter, poultry and fish are actually cheaper than they were a year earlier thanks to falling fertiliser prices and tougher negotiations from supermarkets on own brand items. Meanwhile, olive oil is up 41.7%, cocoa up 19.6% and crisps up 7.7% - thanks to a combination of disappointing harvests and solid demand.
Second hand cars also helped depress inflation. Prices actually increased 0.5% in a month, but were down an impressive 10% in a year compared to a fall of 8.1% in March. Demand has been unwinding for the past nine months. It seems that the vast majority of those who decided they needed a second hand car already have one on the drive by now.
On the flip side, petrol prices were on the rise again putting upwards pressure on inflation. The average petrol price was up 3.3p per litre in a month to 148.1p per litre. Diesel was up 3p to 157.1p per litre. Overall, petrol prices were still 0.3% lower than a year earlier, but the annual gap has been narrowing.
What this means for homeowners
It feels like this should be a healthy dose of good news, but anyone with a mortgage will be sickened to hear its not as good as it seems. For anyone on a variable rate mortgage, nothing will change until we get rate cuts, and the timing of those still hangs in the balance. We cant completely rule out a June rate cut, but it looks distinctly like there are still a few months before your mortgage bills drop.
For those who need to remortgage in the near future, theres no respite either. Fixed mortgage rates had been moving in the wrong direction for months. Moneyfacts figures show the average two-year fixed rate rose from 5.56% at the end of January to 5.93%. There is still hope that lower inflation will inspire some to price in an earlier cut, but we may not see any significant change in the market for a while.
In the interim, higher mortgage rates have taken their toll. The HL Savings & Resilience Barometer shows that the average household with a mortgage spends 16,943 on essential housing costs, almost two thirds more then those who own outright and over a third more than those who rent, so its no surprise so many are holding their breath for cheaper mortgage deals.
What it means for savings
Rates have been dropping across the board, with a number of key players slashing easy access rates in the past week, as they gear up for a summer rate cut. As far as the banks are concerned, theyre attracting enough cash at these rates, so they dont need to be more generous. It means the writing is on the wall for the 5% easy access rate.
Fixed savings rates are being cut too, but there are still some great deals around in this corner of the savings market, including some over 5%. If you dont need the money for a fixed period, it makes excellent sense to consider fixing now, so you can lock in this better rate regardless of potential
What it means for annuities
Todays inflation news is also likely to make the decision between whether to go for a level or escalating annuity or not a bit easier. Inflation-linked annuities have a much lower starting income than their level counterparts. According to HLs annuity search engine, an RPI linked product would deliver up to 4,494 per year for a 65-year-old with a 100,000 pension. This is more than 2,500 per year less than a level product. When inflation ran rampant, the decision was not so clear-cut, as people had to consider how best to meet soaring costs. However, with the landscape looking more benign, more people will be tempted to opt for the level option. However, they should still consider how they can best inflation proof their income during retirement.
Speak to our experts
HL analysts are available for broadcast interviews in studio, on location or via Globelynx, ISDN, Zoom,
Media Contact:
Head of Personal Finance and Podcast host for HLs Switch Your Money On
Email: sarah.coles@hl.co.uk
WFH Tel: 01275 790 129
Work Tel: 07971 073 899
Twitter: @Sarahecoles
Notes to editors
Over 1.85 million clients trust us with 149.7 billion (as at
Saving and investing is for the whole family, and to support intergenerational wealth transfer, weve removed all platform charges and share dealing fees on our Junior ISA, meaning kids go free, and weve reduced the platform fee on our Lifetime ISA to 0.25%, supporting those savings for their first home or for retirement. Regular saving into all funds,
Our award-winning Savings & Resilience Barometer measures the nations financial resilience across our 5 to Thrive pillars equipping people with the tools they need to strengthen their financial futures. Our Switch Your Money On podcast puts the world of investment under the microscope. Each fortnight, our experts discuss the latest news impacting savings and investments and our special guests give the inside scoop on key industry sectors. Find out more about HL and our history, what its like to work with us, and how we support our community.
Press centre: https://www.hl.co.uk/about-us/press
Investor relations: www.hl.co.uk/investor-relations
.
(C) 2024 M2 COMMUNICATIONS, source