24 May 2023
The UK inflation rate has dropped to 8.7%, according to the Office for National Statistics (ONS). For the first time in eight months the Consumer Price Inflation (CPI) rate is in single digits.
CPI is the rate at which the prices of goods and services bought by households rise or fall. It is estimated by using price indices. The ONS keeps track of prices, in a ‘’shopping basket’’ of around 700 popular goods and services bought by households. This is reviewed every year, so that the index is representative and to up to date.
The CPI rose by 8.7% in the 12 months to April 2023, down from 10.1% in March 2023. On a monthly basis, CPI rose by 1.2% in April 2023, compared with a rise of 2.5% in April 2022. According to data released by the ONS today, electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation in April as last April’s rise dropped out of the annual comparison. However, food, alcoholic beverages and tobacco prices continue to rise. CPI inflation was 9.0% in April 2022 and therefore inflation still remains uncomfortably high and is falling at a much slower speed than expected.
How will interest rates change in the future? Keep an eye out for our update on the upcoming Bank of England bank rates, set to be released on 22 June 2023.
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