Cheaper air fares contribute to fall in UK inflation

The UK’s official statistical organisation, the Office for National Statistics (ONS), released its latest Consumer Price Inflation statistical bulletin on Tuesday, which shows inflation in the UK dropped to 0.3% in April this year.

Consumer price inflation is the rate at which the prices of goods and services bought by households rise or fall and is estimated by using price indices.

Lower air fares following the Easter holidays in March this year mainly contributed to the fall in inflation during April, with prices falling by 14.2%, compared with a rise of 4.5% between the same two months in 2015.

Cheaper clothing and vehicles, as well as lower rents for social housing, also helped to lower the inflation rate.

According to the ONS report, the Consumer Prices Index (CPI), a measure of consumer price inflation produced to international standards and in line with European regulations, increased by 0.3% in the year to April 2016, down from 0.5% in the year to March. The CPI is the inflation measure used in the government’s target for inflation and is also used for purposes such as uprating pensions, wages and benefits.

The drop in April 2016 is the first fall recorded since September 2015 and from late 2015, the rate began to increase gradually from close to zero..

These downward pressures were partially offset by an increase in prices for motor fuels and food, as well as for certain recreational goods and cultural services.

Martin Beck, senior economic advisor to the EY Item Club, was quoted by the BBC as saying: “We are likely to see inflation remain close to current rates until the latter part of the year, when the base effects associated with last winter’s collapse in the oil price will begin to kick in and finally drag the CPI measure above 1%.

“Such a benign outlook is likely to stay the MPC’s hand until well into next year.”