Inflation Doubles in April

The Office for National Statistics (ONS) published figures today 19^th May 21 that the UK consumer Prices Index (CPI) inflation rose by 1.5% in the 12 months to April 2021, which is up from 0.7% the previous month.

Prices were driven by household, utility, clothing, and motor fuel.

In the 12 months to April 21 the CPI including owners’ occupiers housing costs was up by 1.6% which is a 1% rise from the previous month.

The largest contributors being housing and household services with 0.57% points and transport costs 0.56% points.

The ONS said “Price rises were partially offset by a downward contribution from recreation and culture”.

Comment

Prices rises are in line with expectations and driven by demands linked to the end of lockdown with delays in manufacturing supply chains.  Brexit trade issues, rising commodity and freight prices are also adding pressure costs in UK manufacturing, these factors are short term but exactly how long before the delays are resolved remains uncertain. As lockdown eases and the economy recovers inflation is likely to continue to rise and various commodity shortages feed through to rising prices.  The recent strength of the pound may counteract inflation as it reduces the cost of imports but how long will the pound continue to strengthen?