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Surprise drop in inflation as air fares and clothing prices fall | Telegraph

UK inflation eased back last month as air fares fell after a temporary rise over Easter.

Prices, as measured by the consumer prices index (CPI), rose by 0.3pc in the year to April, from 0.5pc in March, according to the Office for National Statistics (ONS).

Economists had expected the rate to remain unchanged.

The ONS said a double digit drop in air fares between March and April this year was “by far” the biggest factor dragging down the headline rate last month.

This compares with a rise of 4.5pc between the same two months in 2015.

Economists at BNP Paribas noted that “a number” of core measures of inflation were softer-than-forecast, including second hand car prices, which have continued to fall.

Tuesday’s CPI reading was in line with the Bank of England’s short-term forecast for price growth.

Bank staff expect inflation to edge up gradually over the coming months.

Martin Beck, senior economic adviser to the EY ITEM Club noted that producer prices fell at a shallower pace in April compared with March.

“Pressures are starting to build in the supply chain, which is likely to reflect the impact of the depreciation of sterling, and this will gradually feed into consumer prices,” he said.

“In addition, the recent pickup in the oil price will also continue to exert modest upward pressure on petrol prices.”

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Surprise drop in inflation as air fares and clothing prices fall.

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