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UK Annual Inflation Rate Slides to 2.3% in April vs. 3.2% in March 2024

By:
Bob Mason
Updated: Jun 2, 2024, 10:21 GMT+00:00

Key Points:

  • The UK annual inflation rate fell from 3.2% to 2.3 in April.
  • Consumer prices increased by 0.3% month-on-month in April after rising by 0.6% in March.
  • Hotter-than-expected inflation numbers could test investor bets on a Bank of England June rate cut.
UK Annual Inflation Rate

In this article:

UK Consumer Price Inflation Report for April 2024

On Wednesday (May 22), UK inflation figures for April warranted investor attention amidst rising bets on a June BoE rate cut.

The UK annual inflation rate tumbled from 3.2% to 2.3%, with core inflation falling from 4.2% to 3.9%. Economists forecast annual and core inflation rates of 2.1% and 3.6%, respectively.

In April, consumer prices increased by 0.3% month-on-month after advancing by 0.6% in March. Economists expected consumer prices to rise by 0.2%.

According to the Office for National Statistics,

The Consumer Prices Index, including owner-occupier housing costs (CPIH), rose by 3.0% in the 12 months to April. (March: +3.8%).

  • Gas and electricity price declines made the largest downward contribution to the CPIH annual inflation rate.
  • The Core CPIH (excluding energy, food, alcohol, and tobacco) increased by 4.4% in the 12 months to April 2024. (March: 4.7%).
  • The owner occupiers’ housing costs (OOH) component of CPIH advanced by 6.6% (the highest since July 1992), up from 6.3% in March.
  • Alcohol and tobacco price inflation declined from 11.9% to 8.0% in April 2024.
  • Prices for food and non-alcoholic beverages softened from 4.0% to 2.9% in the 12 months to April 2024.
  • Recreation and culture prices eased from 5.6% to 4.6%.
  • Prices for communication declined from 7.6% to 4.1%.

The Consumer Prices Index, including owner-occupier housing costs (CPIH), rose by 0.5% in April 2024 compared with a 1.2% increase in April 2023.

Bank of England Monetary Policy Implications

The hotter-than-expected inflation numbers could introduce uncertainty regarding the potential for a June Bank of England rate cut. In April, the annual inflation rate remained above the 2% target, with core inflation at 3.9% likely to be a focal point.

GBP/USD Reaction to the March UK Inflation Report

Before the UK inflation report, the GBP/USD fell to a low of $1.27034 before climbing to a high of $1.27231.

However, in response to the April inflation figures, the GBP/USD slipped to a low of $1.27091 before surging to a high of $1.27511.

On Wednesday (May 22), the GBP/USD was up 0.31% to $1.27485.

GBP/USD jumps on hotter-than-expected inflation numbers.
220524 GBPUSD 3 Minute Chart

Up Next

Later in the session, existing home sales figures from the US and the FOMC Meeting Minutes will be in focus. Economists forecast existing home sales to increase by 0.5% in April after sliding by 4.3% in March.

However, the FOMC Meeting Minutes could impact market risk sentiment more. Recent FOMC member speeches signaled a higher-for-longer Fed rate path. More hawkish minutes could fuel speculation about a Fed rate hike and sink investor appetite for riskier assets.

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

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