UK inflation slows as IMF calls for more stimulus
UK inflation fell to its lowest level in more than two years in April, raising the prospect that the Bank of England will be able to inject more stimulus later this year to support the economy.
The Office for National Statistics said consumer price inflation eased to 3pc in April from 3.5pc in March, freeing BoE Governor Mervyn King from the obligation to write an explanatory letter to Finance Minister George Osborne.
Separately, the ONS said Britain's public sector posted a record surplus in April, due to one-off factors, while government borrowing in the 2011/12 fiscal year was revised down to £124.4bn, equivalent to 8.2pc of GDP.
Economists had been expecting a sizeable fall in inflation due to a spike in some prices in April last year not being repeated this year. The ONS said the fall in annual inflation was driven by lower inflation for air and sea transport, clothing and alcohol. Core inflation, which excludes food and fuel costs, and has been a particular source of concern to some BoE policymakers, fell to 2.1pc, its lowest since November 2009.
The BoE targets a 2pc rate for headline CPI. Inflation has now been above the BoE's 2pc target for almost 2-1/2 years and yesterday's data come a week after the central bank predicted it would say there for at least another year before falling to 1.6pc by mid-2014.
Until April, British inflation had fallen more slowly than the BoE expected this year - a factor which many economists said lay behind its decision not to expand its £325bn quantitative easing programme this month, despite the economy having fallen back into recession. (Reuters)
Separate figures published yesterday showed Britain's public finances posted a record surplus in April, a firm start to the 2012/13 financial year. The ONS said the measure of public sector net borrowing excluding financial sector interventions - the government's preferred metric - showed a surplus of £16.5bn last month compared with a deficit of £9bn in April 2011. The figures were flattered by the transfer of 28 billion pounds of pension fund assets from the Royal Mail, which were transferred to the government as it prepares to sell off the company. (Reuters)