- Headline consumer price inflation increased to 9.0 per cent in April 2022 from 7.0 per cent in March. Our measure of underlying inflation which excludes 5 per cent of the highest and lowest price changes, increased to 5.7 per cent in April from 5.6 per cent in March.
- Between March and April, the Housing, water, electricity, gas, and other fuels contributed 1.59 percentage points to the headline figure.
- In April, 28.3 per cent of goods and services prices changed, with above 16,000 items recording price increases, while 4.8 per cent of prices were reduced due to sales and 3.9 per cent fell for other reasons.
- Underlying inflation increased in 7 of the 12 UK regions in April. London’s underlying annual inflation rate remained the highest at 6.7 per cent, compared to Wales which had the lowest rate again at 4.6 per cent in April.
- As the war continues to drive international energy and food prices higher, NIESR forecasts inflation to peak in the fourth quarter of 2022 and remain above target through 2023.
- Consumers will continue to be battered by the storm of a higher cost of living during a time when real wages are being significantly eroded. We continue to expect the Bank of England to raise interest rates through 2022, however there are significant risks that the Monetary Policy Committee may deepen the recession NIESR expects at the end of 2022 if rates are hiked rigorously.
“Annual headline CPI inflation increased to 9.0 per cent in April from 7.0 per cent in March. This marks the largest monthly increase since the 1980s due to the ongoing impacts of the war in Ukraine. On the other hand, our measure of underlying inflation, which excludes extreme price movements, only increased by 0.1 percentage point to 5.7 per cent in April from 5.6 per cent in March. As the war continues to drive international energy and food prices higher, NIESR forecasts annual consumer price inflation will peak in the fourth quarter of 2022 and remain above target through 2023. Persistently high inflation and a forecasted shallow recession at the end of 2022 means The Bank of England continues to sail in treacherous seas with a risk of potentially deepening the recession if rates are hiked rigorously."
Associate Economist, Macroeconomic Modelling and Forecasting
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