U.K. inflation slowed more than economists forecast in April to a seven-month low and producer prices rose the least since 2009 as fuel costs fell.
Consumer prices rose 2.4 percent from a year earlier, down from 2.8 percent in March, the Office for National Statistics said in London today. The median forecast of 35 economists in a Bloomberg News survey was 2.6 percent. Core inflation also cooled, while factory-gate prices increased at the slowest annual pace in 3 1/2 years. The pound weakened.
The Bank of England lowered its forecasts for inflation last week and said price growth may hit its 2 percent target earlier than previously estimated. The central bank, which also raised its growth projections, kept its bond-purchase program at 375 billion pounds ($569 billion) this month. Minutes of the decision to be published tomorrow will show whether Governor Mervyn King continued his bid to boost quantitative easing.
“Looking to short-term inflation in the U.K., it is still likely to move higher in subsequent months,” said David Tinsley, an economist at BNP Paribas SA in London. Still, the data “support our view that inflationary pressures are set to wane due both to lower imported price pressures and because domestic cost pressures are subsiding.”
The pound extended its decline against the dollar after the data, falling toward a six-week low. It was trading at $1.5173 as of 11:05 a.m. London time, down 0.5 percent from yesterday. Against the euro, it weakened 0.5 percent to 84.82 pence.
