UK inflation falls by less than expected, heaping pressure on BoE
Britain’s stubbornly high inflation rate fell by less than expected last month and a closely watched measure of core price rises surged to a 31-year high, according to official data that raised the chances of more interest rate hikes.
Consumer prices rose by 8.7% in annual terms in April, down from 10.1% in March but still leaving Britain with the joint highest rate of inflation among Group of Seven advanced economies alongside Italy.
In Western Europe, only Austria had a higher rate.
Economists polled by Reuters had forecast that the headline CPI annual rate would drop to 8.2% in April, moving further away from October’s 41-year high of 11.1%.
Earlier this month, the Bank of England (BoE) forecast inflation of 8.4% for April.
British government bond prices plunged as investors piled on bets that the BoE will be forced to raise interest rates repeatedly until the end of the year.
“With inflation proving stickier than the Bank expected, it now seems all but certain that the Bank will raise interest rates from 4.50% to 4.75% in June and perhaps a bit further in the months after,” Paul Dales, chief UK economist at Capital Economics, said.
This report’s information was first seen on REUTERS; to read more, click this link.