"Looking to short-term inflation in the U.K., it is still likely to move higher in subsequent months"
-David Tinsley, an economist at BNP Paribas SA
Britain's inflation rate slowed more than economists forecast last month, reaching a seven-month low, while producer prices rose the least since 2009 due to a drop in fuel prices. The nation's consumer prices rose 2.4% on a yearly basis in April, down from 2.8% in the preceding month, the Office for National Statistics said on Tuesday. A gauge of core inflation, which excludes volatile food, energy, alcohol, and tobacco items, also cooled to 2.0% down from 2.4%, while factory-gate prices increased at the slowest annual pace in 3 1/2 years. Earlier this week the Bank of England lowered its inflation estimates, saying price growth may hit its 2% target earlier than previously estimated.
"Looking to short-term inflation in the U.K., it is still likely to move higher in subsequent months," said David Tinsley, an economist at BNP Paribas SA in London. Still, the data "support our view that inflationary pressures are set to wane due both to lower imported price pressures and because domestic cost pressures are subsiding."
"A 2.4 per cent outturn ‘feels' much less problematic than 2.8 per cent and presents a more favorable backdrop for Mark Carney should he be inclined to push for more aggressive monetary activism," said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London.
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