Introduction: UK inflation eases to 2.8% led by lower electricity and gas bills
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
It’s inflation day! (and Nvidia day)
UK inflation slowed more than expected last month, led by lower electricity and gas prices.
The annual inflation rate fell to 2.8% in April from 3.3% the month before, according to the Office for National Statistics. Economists had expected a reading of 3%. The decline was largely because of big increases in utility bills and other regulated prices in April last year, whereas the energy price cap was lower this year.
Core inflation, stripping out volatile food and energy costs, fell to 2.5% from 3.1%.
Food inflation also slowed, to 3% from 3.7%, led by meat, sugar and chocolate, oil, coffee and tea, and soft drinks.
Grant Fitzner, chief economist at the statistics office, said:
"There was a notable fall in annual inflation led by lower electricity and gas prices. This was due to the government’s energy bill support package reducing variable and fixed tariffs, along with lower global wholesale energy prices before the conflict in the Middle East, which fed through to the reduction in the Ofgem cap."
However, the energy price shock caused by the Iran war will drive inflation sharply higher in coming months, with the Bank of England forecasting that it could hit 6.2% early next year under its worst scenario.
The UK chancellor, Rachel Reeves, said:
"The war in Iran is not our war but one we will need to respond to, and the decisions I took in the budget last year have kept inflation down as we deal with global instability. We have the right economic plan, and to change course now would risk our economic stability and leave working people worse off.
We have already taken £117 off energy bills, frozen rail fares, and lifted the two-child limit, and over today and tomorrow I’ll set out the next phase of how we will support UK households."
Reeves is due to announce more measures to reduce the cost of living on Thursday, including a cancellation of a fuel duty increase which is due to take effect in September.
Today, she is expected to unveil sweeping reforms, giving parliament the authority to approve critical energy and infrastructure projects, and better protect them from judicial reviews.
"For too long, vital infrastructure delivery has been delayed by judicial reviews of projects.
She [Reeves] is clear that parliament must take back control to get Britain building the power plants, wind farms and grid connections that will bring bills down, strengthen our energy security, and deliver growth in every part of our country."
Asian stocks fell, extending a losing streak, as inflation fears hammered bonds. Investors are awaiting quarterly results from Nvidia, the world’s most valuable company, later today.
Japan’s Nikkei dropped 1.5%, while South Korea’s Kospi lost 1.6%. Hong Kong’s Hang Seng index slipped 0.67% and China’s CSI300 was flat.
9.30am BST: UK House prices and rents
10am BST: Eurozone inflation (final)
7pm BST: US Federal Reserve minutes of last meeting
