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22 May 2019

Inflation rises over energy costs and air fares

UK Consumer Price Inflation (CPI) broke ahead of the Bank of England’s 2% target in April rising to 2.1% from 1.9% in March.

James Rowbury, Investment Research Coordinator at investment management and stockbroking firm Redmayne Bentley, said: “However, it still fell short of the 2.2% forecast. The two main catalysts for the upward move were energy prices and air fares. Following the removal of the cap on energy costs earlier this year, utility firms have moved quickly to hike prices and consumer energy prices were up 11% during the month despite producer input prices only increasing by 2%, a move that is sure to hurt households.

“Air fares surged 26% during the month as airlines benefited from increased flight demand over the Easter period. This jump in inflation means that real wage growth in the UK has now slowed to 1.2%, eroding improvements seen earlier in the year and presenting a challenge to Bank of England governor Mark Carney. If inflationary pressures continue, so will the pressure on Carney to potentially raise rates, despite Brexit negotiations currently appearing at a standstill and the future of the UK economy still very much unknown.”

Ends

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Inflation rises over energy costs and air fares

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