most important point
- Inflation fell to 8.7 per cent.
- analyze:Inflation did not fall as quickly as expected, while core inflation rose, which could mean another rate hike
- Inflation in the UK remains higher than most G7 countries
- New forecast for when the 2% inflation target will be reached
- IMF dramatically improves UK economic outlook
- Netflix begins cracking down on password sharing in the UK
- UK house prices hit record high in May - Rightmove
- That's the dilemma:My employer has reduced my hours while I am on maternity leave, is this allowed?
- Mors budget:save for your children|Do you want to save money by subscribing to Mad?|holiday pay|The best broadband offers
Asda is offering £1 kids meals again midterm
To help tackle rising food prices, Asda has announced it will offer £1 off Kids Eat cafeteria meals for the next six months.
The supermarket delivered more than 115,000 meals during the two weeks of Easter.
"This deal is different to other retailers because there are no hidden extras such as the minimum adult spend," Asda said.
Menu items include penne with meatballs and vegan Hidden Veg pasta. Kids also get a free piece of fruit when they buy £1 offers.
As an alternative to hot meals, Asda Café also offers cold and mixed options for £1, including sandwiches, drinks and a piece of fruit.
New forecast for when inflation will reach the 2% target
While it is positive that inflation has fallen to 8.7%, it is still a long way from the Bank of England's target of 2% and, as we have discussed, the overall figure has not fallen as quickly as expected.
Referring to the key inflation concerns outlined in our 7:42 post. m., Jack Finney, economist at PricewaterhouseCoopers, said: "Even more worrying is the fact that the Bank of England is closely watching inflation in the services sector. 6.6% to 6.9%.
"This is the highest rate since March 1992 and higher than the 6.7% the Bank of England expected earlier this month."
After today's announcement and "more persistent inflationary pressures", he does not believe the bank will reach its 2% target before the end of 2024.
"By that time, consumer prices may have gone up by a fifth," he added.
Nevertheless, Finney predicted that inflation would continue to fall in the coming months, with the next significant drop likely to come when the energy price guarantee expires in July.
"At that point, the sharp fall in wholesale gas prices will start to translate into lower energy prices for UK consumers," he said.
Fall in inflation will take time to materialize in supermarkets - ONS
That's what Grant Fitzner, chief economist at the ONS, said in a morning interview.
"We're no longer in double digits," he told BBC Radio 4. "We've seen prices for bread, cereals, fish, milk, cheese, eggs, sugar, jams and honey, so that's positive."
men...
“Let's not forget that many supermarkets have fixed contracts that can take six to 12 months to complete and when those contracts expire they will hopefully renegotiate them at lower prices.
"It will take some time for this to affect retail prices."
Jeremy Hunt responds: Labor is attacking the government
Chancellor Jeremy Hunt reacted to the inflation figures.
“The IMF said yesterday that we have acted decisively to tackle inflation, but while it is good that inflation is now in single digits, food prices are still rising too fast.
"So as well as giving households around £3,000 in cost of living support this year and last year, we must stick to our plan to reduce inflation."
We also received feedback from Shadow Chancellor Rachel Reeves, who said: “As bills continue to rise, households will worry that food prices and the cost of other essentials will continue to rise.
"You will ask why this Conservative government still refuses to address this cost of living crisis, why it does not impose a proper windfall tax on the huge profits of major oil and gas companies."
She said the Labor Party's mission was to ensure the highest sustained growth in the G7 and better lives for families.
Inflation did not fall as quickly as expected, while core inflation rose, which could mean another rate hike
Core inflation, which excludes energy, food and tobacco prices, rose to 6.8%, the highest since March 1992.
Stripping out these volatility factors gives us a more accurate picture of the state of the economy, which is likely to affect the Bank of England ahead of its next interest rate decision on 22 June.
Of course we have another inflation number before then, butData and Economics Editor Ed ConwayExplain what it means to people…
"The problem is that inflation has not fallen as many had expected.
"City economists think it's down to 8.2%. Perhaps the fact that it's 8.7% means the Bank of England now needs to make a rate decision."
"At the moment they are at 4.5 percent. A lot of people think that if inflation comes down, maybe 8.1 percent this time, 8.2 percent this time, the central bank may not need to raise interest rates any more. at the next meeting. "
"The fact that it's quite high compared to expectations means they may have to raise rates again."
Three areas where inflation is rising, plus food inflation remains high
For a while we have been looking at figures from the Office for National Statistics that have been published. The ONS identified four areas where inflation was high or rising.
Food and non-alcoholic beverages...
"...an annual growth rate of 19.1% in April 2023 and 19.2% in March 2023," the ONS said.
The ONS added that price movements in bread and cereals, fish, milk, cheese and eggs as well as sugar, jam and honey contributed to a small fall in prices in the region.
However, vegetable prices rose faster in April.
leisure culture...
"Prices for general entertainment and cultural goods and services rose by 6.4% in the year to April 2023, up from 4.6% in March," the ONS said.
"AV equipment provided the largest positive contribution with a monthly increase of 1.5% compared to a 2.8% decrease in the same period last year."
However, the ONS noted that "movements in this category depend in part on the composition of the bestseller lists."
Therefore, the short-term interest rate movement should be "interpreted with caution".
Alcohol and tobacco...
"Tobacco prices rose by 9.1% in the year to April 2023, up from 5.3% in March. The main contribution to this increase came from an 11% rise in tobacco prices in the year to April 2023," the ONS said.
The increase was influenced by an increase in tobacco taxes, which have not increased since October 2021.
Wine and beer also contributed to the rise.
transport...
"Annual transport inflation was 1.6%, the first time annual inflation has risen in nine months," the ONS said.
"A major contributor to this growth was used car purchases, which rose 2.7% between March and April 2023, compared to a 3.1% decline in the same period last year."
However, inflation for motor fuels fell.
Inflation in the UK remains higher than most G7 countries
The 8.7% figure we just told you is higher than the 7.6% in Germany, 6.9% in France, 4.4% in Canada, 3.8% in the US and the 3.4 % from Japan.
However, it was lower than Italy's 8.8%.
The overall figure for the EU-27 is 8.1%.
The graph was released by the ONS this morning...
Inflation fell to 8.7 per cent.
Inflation fell below 10% for the first time since August.
It fell to 8.7% in April from 10.1% in March.
Economists polled by Reuters had forecast 8.2 percent, but again the decline was not as steep as expected.
According to Pantheon Macroeconomics, electricity and natural gas prices rose by 40.5% and 66.8% respectively in April 2022. In contrast, they were flat last month, bringing the number down.
The ONS said this morning: “The fall in the annual rate of inflation for April 2023 largely reflects price changes in the housing and household sector, particularly gas and electricity.
"This was partially offset by upward effects from entertainment and culture, alcoholic beverages and tobacco, communications and transportation."
Inflation is the rate at which prices rise.
It has been high for more than a year, largely due to global factors such as the war in Ukraine that caused Russia to cut its supplies of natural gas, leading to higher energy prices.
Just because inflation has fallen does not mean that prices have fallen. Any value above zero means prices are rising; needofInflation drives prices down, something few expected to happen.
Netflix begins cracking down on password sharing in the UK
Netflix has started sending emails to UK customers who share their accounts with someone 'outside the home'.
The streaming giant says a Netflix account is "for family use" and those who want to share their accounts will have to pay £4.99 to do so.
Netflix released a statement online last night saying: “Everyone in that household can use Netflix anywhere – at home, while travelling, on holiday – and benefit from Streaming Profiles and Manage Access and new features like Teams.
An attached screenshot of the email describes how customers can share their accounts.
These include allowing users to "transfer" profiles to "new paying members" or purchase additional memberships for an extra £4.99 per month.
Since rapidly expanding in the UK in 2017, Netflix has changed its tune after joking on Twitter that "love is a shared password".
Read the full story here...
Food inflation eases slightly, helped by milk - we'll see what that means for headline inflation at 7.00.
Falling milk prices helped push down grocery inflation for a second straight month, according to industry data.
Kantar Worldpanel, which tracks supermarket sales and prices, measures annual growth in grocery storesinflationIn the four weeks ending May 14, the increase was 17.2%.
That was down from 17.3% in the previous four weeks, but still at the third-highest level since the 2008 financial crisis.
The price of four pints of milk has been reduced by 8p in four weeks due to higher feed, production and transport costs.
But Kantar added that prices were still much higher than 12 months ago, currently at £1.60 compared to £1.30.
You can read the full story on food inflation below while we wait for the ONS headline at 7.00.
FAQs
Will cost of living go down UK? ›
Experts predict it will be at least another few years, possibly lasting until 2028. The Office for Budget Responsibility is warning of a big drop in living standards over the next two years. Once inflation is taken into account, living standards are set to fall by 5.7 per cent between 2022 and 2024.
What is the cost of living increase for 2023 UK? ›Consumer prices, as measured by the Consumer Prices Index (CPI), were 10.1% higher in March 2023 than a year before. Increases in the costs of consumer goods, underpinned by strong demand from consumers and supply chain bottlenecks, have been factors causing rising inflation in 2021 and 2022.
Who loses inflation higher than expected? ›Lenders are hurt by unanticipated inflation because the money they get paid back has less purchasing power than the money they loaned out. Borrowers benefit from unanticipated inflation because the money they pay back is worth less than the money they borrowed.
What is the CPI forecast for 2023? ›The average growth rate of the so-called 'health price index', which is used for the price indexation of wages, social benefits and house-rent, should be 4.4% in 2023 and 3.6% in 2024, compared to 9.25% in 2022 and 2.01% in 2021.
Is it more expensive to live in UK than USA? ›The average rent per month for a one-bedroom flat in the UK is £700. In the USA it is $1,169, which works out to around £940 per month, making the UK a clear winner here.
Will inflation go down in 2023 UK? ›We expect inflation to fall quite quickly, to around 5% by the end of this year and then meet our 2% target by late 2024. Why is inflation expected to fall quickly during 2023? What is the Bank of England doing to help bring inflation down? How does raising interest rates lower inflation?
Will food prices go down in 2023 UK? ›Food retailers have said they expect prices to rise in 2023 overall but with the rate of inflation declining through the year and some products which have seen the sharpest rises falling in price.
What is the US government cost of living increase for 2023? ›While the 2022 COLA adjustment was 5.9%, government inflation data showed costs grew at a faster pace for much of last year. Now, the 8.7% COLA for 2023 is outpacing current inflation, with a 5.8% increase over the past 12 months for the consumer price index for urban wage earners and clerical workers, or CPI-W.
Why is UK inflation so high? ›Britain has struggled more than other countries with the surging cost of food, a shortage of workers to fill jobs and its heavy reliance on natural gas to generate power and domestic heating, all of which adds to inflation pressure. Below is an explanation of Britain's high inflation problem.
Who gets rich during inflation? ›Inflation benefits those with fixed-rate, low-interest mortgages and some stock investors. Individuals and families on a fixed income, holding variable interest rate debt are hurt the most by inflation.
Who gains most from inflation? ›
In summary: Inflation will hurt those who keep cash savings and workers with fixed wages. Inflation will benefit those with large debts who, with rising prices, find it easier to pay back their debts.
Who suffers the most from high inflation? ›Prior research suggests that inflation hits low-income households hardest for several reasons. They spend more of their income on necessities such as food, gas and rent—categories with greater-than-average inflation rates—leaving few ways to reduce spending .
What is the prediction for inflation in the US? ›Different agencies' predictions differ, putting US CPI inflation within the range of 7.0% to 8.1% percent in 2022 and around 2.8-3.5% in 2023.
What is the predicted inflation rate for 2023 and 2024? ›Global inflation is expected to fall from 8.8 percent in 2022 to 6.6 percent in 2023 and 4.3 percent in 2024, still above pre-pandemic (2017–19) levels of about 3.5 percent.
Is it better to live in England or America? ›The UK is often considered to be a cheaper place to live. The cost of living in both countries is not the same and can vary depending on where people choose to live. It's also important to note that the average salary for someone in the US is significantly higher than what it would be in the UK due to taxes.
Is food more expensive in UK or USA? ›Cost of Food
Bread, rice, and many fruits and vegetables are mostly less expensive in the UK. However, keep in mind that foods such as milk, chicken breasts, and eggs will cost you between 20-40% more in the UK. Again, it's important to consider which city in the US you're considering moving to.
Contrary to popular belief, you need a visa to move to the UK if you are an American citizen. The only exception to this is that if you are visiting with no long-term plans, you can stay in the UK without a visa for six months – but you cannot work during your visa-free stay.
Will inflation go down in 2023? ›The current trend is certainly positive, and experts generally agree that inflation is headed to a more favorable place — at some point in the relatively near future. Ben Johnson, Chief Operating Officer of Kapitus, says, “We expect inflation to remain above the Fed's 2% target rate throughout 2023…
Why is the UK so unaffordable? ›Shortage of supply – low numbers of new houses built. Rising number of population. UK population rising, plus number of households increasing due to social factors, such as more people living alone.
Why is UK cost of living so high? ›
Many of the reasons are the same - increased energy costs, shortages of goods and materials and the fallout from Covid. The annual inflation rate for countries which use the euro is estimated to be 6.9% for March, down from 8.5% in February. Inflation has been falling in the US too.