UK April inflation expected to see largest drop in 30 years... Could tightening end sooner?

Expert Predicts 8.2% CPI
Largest Drop Since 1992
Excludes Impact of Energy Price Cap

UK inflation, which had recorded double-digit growth rates for seven consecutive months, showed the largest decline in 30 years, raising expectations that the Bank of England (BOE) will ease its tightening measures.

Bloomberg reported that according to its own survey of economic experts, the UK's Consumer Price Index (CPI) for April is expected to fall by 1.9 percentage points from the previous month to 8.2%. This represents the largest drop since March 1992, when inflation surged due to former Prime Minister Margaret Thatcher's tax cut policies. In March of that year, UK inflation was 7.1%, but it sharply dropped by 2.4 percentage points in April, gradually stabilizing thereafter.

Residents of London, England are shopping at a supermarket.
Photo by Yonhap News

Earlier, economists had given positive forecasts, interpreting the decline in the UK's CPI inflation rate from its peak of 11.1% in October last year through January as a sign that inflation was being controlled. However, after a slight increase to 10.4% in February and continued double-digit inflation in March, voices within the BOE called for continued interest rate hikes. The UK was the only Western European country to record double-digit inflation in March.

The persistent inflation in the UK is due to rising food and energy prices pushing up wages. Governor Bailey explained on the 17th that "core inflation has caused a secondary effect of pushing up wages."

However, the inflation rate for April this year is expected to show a significant decline due to the base effect from last year's sharp rise in energy prices. The UK operates an energy price cap system to prevent energy companies from charging excessive fees. In April last year, this cap was raised by 54%. Bloomberg stated, "In April this year, the base effect from last year's surge in energy prices will cause a sharp decline."

Additionally, the market expects the UK's energy regulator, Ofgem, to lower this cap in July, which is anticipated to reduce household energy expenditures.

Bloomberg predicted, "The April CPI release will mark the end of the ongoing trend of double-digit inflation, which will ease the pressure on the BOE's tightening measures."

This content was produced with the assistance of AI translation services.