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Inflation falls for first time since September

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UK inflation dropped to 0.3% in April, marking the first fall since September, official figures show.

The rate, as measured by the Consumer Prices Index, fell from 0.5% in March.

Falls in air fares and prices for clothing, vehicles and social housing rent were the main contributors to the decrease in the rate, the Office for National Statistics said.

Maike Currie, investment director for personal investing at Fidelity International, said: “With inflation more than one percentage point away from the Bank of England’s 2% target, governor Mark Carney has penned his sixth consecutive open letter to the Chancellor, explaining the current weakness in inflation reflecting the past falls in energy and food prices alongside the drag on imports given sterling’s past appreciation.

“The Bank of England however expects inflation to increase steadily over the following months, reaching 0.9% in September, as the falls in energy and food prices drop out of the annual comparison. The recent pickup in oil prices should also support a rise in prices coupled with the weaker pound.”

By far the largest downward effect came from air transport, with prices falling by 14.2% compared with a rise of 4.5% between the same two months last year. This was due to the earlier than usual timing of Easter, which contributed to a large increase in fares between February and March 2016, with a subsequent fall in April 2016.

Last week, the Bank of England’s Monetary Policy Committee voted unanimously to hold the Bank Base Rate at its record low of 0.5% for another month.

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