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18 April 2018

Inflation falls back to 2.5 per cent

UK consumer price inflation (CPI) dropped to 2.5% during March 2018, its lowest level in a year, the Office for National Statistics revealed today.

Naeem Siddique, Investment Manager at investment management and stockbroking firm Redmayne Bentley, said: “We continue to see a fall in the inflation rate with headline CPI coming in at 2.5% for March.  CPIH, which includes owner occupiers’ housing costs, fell to 2.3% from 2.5% in February.

“The main detractors to the inflation rate were a continued slowing in the level of price rises in clothing and footwear against a year ago.  Likewise, alcohol and tobacco did not see any duty increases, which meant prices rose by a lower rate than 12 months ago.  

“The rise of Sterling against the US Dollar over the past 12 months looks to have contributed to the reduced increase in clothing prices, given the level of imports of these goods. The 13% rise from March 2017 to March 2018 has meant that import costs are expected to fall year over year, or at least negate some price increases at the factory gates.  While this inflation reading has meant Sterling falling, due to the faster than expected drop in inflation, the trajectory of a stronger currency remains intact.

“This morning’s inflation figures, coupled with the pace of wage increases we saw yesterday, give the Governor of the Bank of England further support to increase the base rate to 0.75% come May.  The inflation rate looks to be heading towards target, and British workers, on the whole, are seeing wages rise faster than prices. The increase in the base rate has been factored into the currency markets, which should see further moves downward in inflation on a year over year basis. As the world economy continues to gain strength, notwithstanding the potential of a trade war, which looks to be (tentatively) receding, we could see consumer confidence improve, just as the weather looks to do the same.”

Notes to editors
Established in 1875, Redmayne Bentley is one of the UK’s largest independent investment management and private client stockbroking firms, with more than 30 regional offices throughout the UK and in the Republic of Ireland.

Redmayne Bentley has experienced commentators available for comment on personal finance and stock market issues.

For all media enquiries and comment, please contact Ruth Peterson, PR Executive, on 0113 200 6476 or email ruth.peterson@redmayne.co.uk
 
 
Inflation falls back to 2.5 per cent
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