MercoPress. South Atlantic News Agency

UK annual consumer inflation down to 2.3% in April

The British annual consumer prices inflation was 2.3% in the year to April, down from 2.9% in the year to March, falling closer to the 2% target set by the government which most commentators had been expecting as utility bills were cut to reflect falling oil prices.

This was partly offset by rising transport costs due to a sharp rise in second hand car prices, fuels and lubricants, as well as air travel.

Anecdotal evidence suggests that the government scrappage scheme -launched Monday- had boosted demand for second hand cars as buyers hoped to take advantage of the incentives for buying new cars.

The average price of petrol rose by 4 pence per litre between March and April this year, to stand at 94.4 pence, compared with a rise of 1.9 pence last year, reflecting an increase in excise duty.

Retail price inflation - used to set wages - though shrank by 1.2% in the year to April, much sharper than the 0.4% contraction registered in the year to March and the steepest annual fall since 1949.

The sharp fall was mostly because of a large downward pressure from housing, especially mortgage interest payments - down 46.9% compared to April 2008.

There were also downward effects from house depreciation, rent, council tax and dwelling insurance. All of these housing components, except for rent, are excluded from the CPI.

The falls in both CPI and RPI inflation were greater than expected. Economists had been looking for CPI at 2.4% and RPI to shrink to 1.2%.

RPIX inflation – the all items in RPI excluding mortgage interest payments – was up to 1.7% in April, down from 2.2% in March.