MNI DATA ANALYSIS: UK April Inflation Falls On Air Fares>

-UK April CPI +2.4% y/y vs +2.5% in March, lowest since March 2017

-UK April Core CPI +2.1% y/y vs +2.3% in March

-UK April Input PPI +5.3% y/y vs +4.4% in March

-UK March House Price Index +4.2% y/y; London HPI -0.7% y/y

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - Consumer price inflation fell further in April, kept 

in check by falling air fares, but a surge in crude oil prices lifted 

input prices and could feed into consumer prices in months to come. 

     The consumer price index increased by an annual rate of 2.4% last 

month, the smallest rise since March of 2017, below the MNI median 

forecast of 2.5%, after a 2.5% rise in March. 

     Air fares fell by 0.2% between March and April, after rising by 

18.6% in the same period a year ago, due to the timing of Easter. 

Consumer transport shaved 0.09 percentage points from the change in CPI. 

     However, rising fuel prices partially countered the downward 

pressure from air fares, with petrol prices rising by 1.5 pence a litre 

in the month of April, after a 1.8 pence a litre fall in 2017.  

     Consumer prices rose by 0.4% between March and April, after rising 

by 0.1% between February and March, compared to the MNI median of a 0.4% 

monthly increase. 

     The result matched Bank of England staff forecast of a 2.4% annual 

rise in April, as reported in the May Quarterly Inflation Report. 

     While that takes inflation above the Bank's 2.0% target for the 

fourteenth straight month, consumer price inflation is falling more 

rapidly than expected. The Bank's Monetary Policy Committee opted to 

leave rates on hold at its rate-setting meeting earlier this month, 

despite suggestions earlier in the year that a May rate hike could be on 

the cards. 

     However, the minutes of that meeting hinted that rates are likely 

to rise later in the year, with members agreeing that "an ongoing 

tightening of monetary policy over the forecast period would be 

appropriate to return inflation sustainably to its target at a 

conventional horizon." Governor Mark Carney confirmed the outlook in 

comments to the Treasury Select Committee on Tuesday.  

     Core inflation continued to decelerate, alleviating some of the 

pressure on the Bank. Stripping out food and energy, annual core 

consumer inflation declined to 2.1%, the slowest pace of increase since 

March of 2017, compared to the MNI median of 2.2%, down from the 2.3% 

pace recorded in March. 

     CPIH, which regained its status as a national statistic last year, 

fell to an annual rate of 2.2% from 2.3% in March. 

     A 19.9% rise in crude oil prices in April led to a marked 

acceleration in pipeline inflation. Producer input prices jumped by 0.4% 

between March and April, for an annual gain of 5.3%, although the 

outturn undershot the MNI median of a 5.8% year-on-year rise, after an 

4.4% increase in March. 

     Imported material prices, which comprise some two thirds of inputs 

to the manufacturing sector, increased by an annual rate of 4.5% last 

month, extending a 3.0% rise in March, with crude oil and fuels 

accounting for the bulk of the acceleration. 

     However, rising energy prices exerted a muted effect on output PPI, 

which rose by 0.3% between March and April, leaving the annual increase 

at 2.7%, unchanged from March. Excluding erratic items, core output PPI 

declined to an annual rate of 2.4% from 2.7% in March. 

     Retail price inflation ticked a bit higher, with RPI rising by an 

annual rate of 3.4% in April, up from a 3.3% pace in March, topping the 

MNI median of 3.3% increase.  

     Stripping out mortgage interest payments, RPI-X steadied at an 

annual rate of 3.4% in April, unchanged from March. 

     Meanwhile, UK house price inflation also steadied in March, with 

the official House Price Index rising by an annual rate of 4.2%, 

matching the April outturn, the slowest rise since April of last year. 

     London housing inflation continued to lag the rest of the country, 

with prices in the capital falling by 0.7% in March, the biggest fall 

since September of 2009, extending a 0.1% drop in February. 

-London bureau: 44 (0) 203 865 3812; email:ukeditorial@marketnews.com 

[TOPICS: M$B$$$,MABDS$]