Pockets hit as inflation reaches a three-year high

Inflation: It makes our money worth less. Picture by Chris Radburn/PA Wire
Inflation: It makes our money worth less. Picture by Chris Radburn/PA Wire
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Inflation hit a three-and-a-half-year high last month as the Brexit-hit pound and the timing of the Easter holidays pushed up the cost of living.

The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measure of inflation reached 2.7% in April, the highest rate since September 2013.

The rise keeps the rate above the Bank of England's 2% target and comes after CPI paused at 2.3% in February and March.

The Bank said in its inflation report on Thursday that CPI would peak at 3% later this year, as the pound's slump since the Brexit vote causes price tags on everyday items to tick higher.

The main upward impact on the cost of living came from air fares, which jumped by 18.6% month-on-month in April due to the impact of the Easter holidays.

Airline prices rise sharply around the Easter break, which fell on April 16 this year rather than March 27 in 2016.

The price of clothes also rose to the highest level for six years, climbing by 1.1% between March and April after falling by 0.4% a year ago.

The ONS said the timing of when shops put items on sale may have caused prices to jump, with the number of discounted items falling between March and April this year after rising slightly a year ago.

Food prices also became more expensive in April, rising 0.2% month-on-month after coming in flat last year.

The way the ONS measures prices means Npower and Scottish Power's decision to increase gas and electricity prices in March also had an upward impact on the headline rate.

The overall price of electricity rose by 2.5% month-on-month after falling by 0.2% a year ago, but the rise was partly offset by a cap placed on prepayment meter charges.

Despite the price hikes from some utility companies, gas prices dropped by 0.6% over the period.

The downward pressure on the cost of living came from fuel pump prices, with petrol falling by 1.8p to 117.4p per litre and diesel also dropping by 1.8p to 120.3p per litre.

The Consumer Price Index including owner occupiers' housing costs (CPIH) hit its highest level since June 2013 at 2.6% in April, up from 2.3% in March.

CPIH is the ONS's preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.

The Retail Price Index (RPI), a separate measure of inflation which includes council tax and mortgage interest payments, reached 3.5% last month, up from 3.1% in March.