Key points
- Inflation falls to 8.7%
- Three areas where inflation rose - plus food inflation remaining sky high
- UK inflation remains higher than most of G7
- IMF dramatically upgrades outlook for UK economy
- Netflix's crackdown on password sharing starts in UK
- UK house prices hit record level in May - Rightmove
- Your dilemmas: My employer has reduced my hours while I'm on maternity leave - is this allowed?
- Budgeting Mum: Saving for your children | Do food subscriptions save you money?| Holiday spending money| Best broadband deals
Jeremy Hunt responds - as Labour attacks government
Chancellor Jeremy Hunt has given his response to the inflation figures.
"The IMF said yesterday we've acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast.
"So as well as helping families with around £3,000 of cost of living support this year and last, we must stick resolutely to the plan to get inflation down."
We've also had comments from shadow chancellor Rachel Reeves, who said: "As bills keep surging, families will be worried food prices and the cost of other essentials are still increasing.
"They will be asking why this Tory government still refuses to properly tackle this cost of living crisis, and why they won't bring in a proper windfall tax on the enormous profits of oil and gas giants."
She said Labour's mission was to secure the highest sustained growth in the G7 to make families better off.
Inflation down - but core inflation up, and this is a worry for BoE
Core inflation, which excludes energy, food and tobaccoprices, rose to 6.8% - the highest rate since March 1992.
The exclusion of these more volatile elements gives us a more precise idea of how the economy is looking, and the figure is likely to concern the Bank of England ahead of its next interest rate decision on 22 June.
We do have another inflation figure before then, however.
Three areas where inflation rose - plus food inflation remaining sky high
We've been drilling into the Office for National Statistics data released a short time ago. The ONS points to four areas where inflation either remains sky high or rose.
Food and non-alcoholic beverages...
"... saw an annual rise of 19.1% in April 2023 compared with an annual rise of 19.2% in March 2023," according to the ONS.
Price movements on bread and cereals, fish, milk, cheese and eggs, and sugar, jam and honey contributed to this slight drop in this area, the ONS added.
Vegetable prices rose at a faster rate in April, however.
Recreation and culture...
"Prices for recreational and cultural goods and services rose, overall, by 6.4% in the year to April 2023, up from 4.6% in March," the ONS said.
"Audio-visual equipmentprovided the largest positive contribution, which saw a monthly increase of 1.5%compared with a fall of 2.8%in the equivalent time period last year."
The ONS noted, however, that "movements in this class depend, in part, on the composition of bestseller charts".
Therefore, short-term movements in the rate "should be interpreted with a degree of caution".
Alcohol and tobacco...
"Rose by 9.1% in the year to April 2023, up from 5.3% in March. The main contribution tothis increase came from an 11% rise in tobacco prices in the year to April 2023," the ONS said.
The increase was influenced by the rise in tobacco duty, which had not increased since October 2021.
Wine and beer also contributed to upward movement.
Transport...
"The annual inflation rate for transport was 1.6%, the first increase in its rate of annual inflation in nine months," the ONS said.
"An important contributor to this rise was the purchase of second-hand cars, which saw an increase of 2.7% between March 2023 and April 2023 compared with a fall of 3.1% in the same time period last year."
Motor fuel, however, saw declining inflation.
UK inflation remains higher than most of G7
The 8.7% figure we've just told you about is higher than 7.6% in Germany, 6.9% in France, 4.4% in Canada, 3.8% in the US and 3.4% in Japan.
It is lower than Italy's figure of 8.8%, however.
The overall EU27 figure is 8.1%.
This chart was released by the ONS this morning...
Inflation falls to 8.7%
Inflation has fallen below 10% for the first time since August.
It was down to 8.7% in April - from 10.1% in March.
Economists polled by the Reuters news agency predicted 8.2% - but once again the drop isn't as large as expected.
Electricity and natural gas prices leapt by 40.5% and 66.8% respectively in April 2022, data from Pantheon Macroeconomics showed. Comparatively, they held steady last month, which has brought the figure down.
The ONS said this morning: "The easing in the annual inflation rate in April 2023 mainly reflected price changes in the housing and household services division, particularly for gas and electricity.
"This was offset partially by upward effects coming from recreation and culture, alcoholic beverages and tobacco, communication, and transport."
Inflation is the rate at which prices are rising.
It has been sky high for more than a year now, in large part because of global factors such as the Ukraine war, which has resulted in Russia squeezing its gas supply, leading to higher energy prices.
Just because inflation comes down, it doesn't mean prices are. Anything over zero means prices are rising - we'd needdeflation for prices to fall, and few people expect that to happen.
Netflix's crackdown on password sharing starts in UK
Netflix has begun sending emails to UK customers who are sharing their accounts with people "outside their household".
The streaming giant said a Netflix account was "for use by one household" and those wanting to share theirs must pay £4.99 to do so.
Netflix posted a statement online last night which read: "Everyone living in that household can use Netflix wherever they are - at home, on the go, on holiday - and take advantage of new features like Transfer Profile and Manage Access and Devices.
An attached screenshot of the email details ways customers can share their accounts.
These included allowing users to "transfer a profile" to a "new membership that they pay for" or buying an extra member for the price of £4.99 extra per month.
Netflix has changed its tune since joking on Twitter that "Love is sharing a password" as it was quickly expanding in the UK in 2017.
Read the full story here...
Food inflation eases very slightly with help of milk - we'll see what this means for overall inflation at 7am
Falling milk prices have helped drive grocery inflation lower for a second consecutive month, according to industry data.
Kantar Worldpanel, which tracks supermarket sales and prices, measured the annual rate of groceryinflationat 17.2% over the four weeks to 14 May.
That was down from 17.3% in the previous four-week period but still at the third-highest level since the 2008 financial crisis.
The cost of four pints of milk, which had risen due to higher feed, production and transportation costs, fell by 8p over the four weeks.
But Kantar added that prices were still much higher than they were 12 months ago, at £1.60 currently compared to £1.30.
You can read the full story on food inflation below while we wait for the overall figures from the ONS at 7am.
Inflation update expected at 7am - here's what experts predict
Economists polled by the Reuters news agency see the annual inflation rate easing to 8.2% in April from the current 10.1%.
Electricity and natural gas prices leapt by 40.5% and 66.8% respectively in April 2022, data from Pantheon Macroeconomics showed. Comparatively, they held steady last month, which should impact the ONS figure released at 7am.
It is, however, only right to point out expert predictions have been too low in the previous two months as inflation remained unexpectedly in double digits.
What is inflation?
Inflation is the rate at which prices are rising.
It is currently through the roof at 10.1%, in large part because of global factors such as the Ukraine war, which has resulted in Russia squeezing its gas supply, leading to higher energy prices. The conflict has also seen tonnes and tonnes of Ukrainian grain stuck in ports, contributing to increased food costs.
For obvious reasons, governments want to keep inflation low - the target is 2%, and Rishi Sunak has pledged to get closer to that, 5%, this year.
But just because inflation comes down, it doesn't mean prices are. Anything over zero means prices are rising - we'd need deflation for prices to fall, and few people expect that to happen.
Bank of England admits it made errors in forecasting UK inflation
Bank of England policymakers faced criticism during a Treasury Committee meeting over the failure to predict a prolonged rise in inflation.
Conservative MP John Baron accused the Bank of a "woeful neglect of duty" in not bringing inflation close to its 2% target, which he said is causing "real pain" to households and businesses.
Huw Pill, the Bank's chief economist, acknowledged its economic forecasting models have led to mistakes.
He said: "We recognise our forecasts on inflation have been too low.
"We are trying to understand why we have made those errors, interpret those errors in terms of the behaviour, and make an assessment in terms of how it will continue."
It came as the Bank earlier this month revised its inflation expectations after saying food price inflation had been more stubborn than expected.
It previously thought the UK's Consumer Prices Index (CPI) inflation could fall as low as 1% by the middle of next year, but it is now predicted to reach about 3.4%.
Bank governor Andrew Bailey responded to criticism that the Bank had lost the confidence of the public over its economic modelling and interest rate decisions.
He said: "I think there are some very big lessons in how we operate monetary policy in the face of very big shocks. Because the shocks that we have faced have been unprecedented.
"I think there are big lessons about how we operate policy in that world - in a world of very big uncertainty."
'IMF keeps getting things wrong...'
Following on from the IMF forecast we told you about a short time ago, we have a video of data and economics editor Ed Conway asking the organisation's managing director how significant it is that they keep getting things wrong.
Watch what she said...
FAQs
Is UK inflation higher than other countries? ›
Inflation is higher in the UK than other advanced countries such as Germany, 7.6%, France, 6.9%, and the US, 4.9%.
Why is inflation higher in the UK than the rest of Europe? ›Gas prices
Rising energy prices hit UK households and businesses hard - harder than in other European countries. According to Reuters, Britain's high rate of energy inflation shows it's over-reliant on gas for heating homes. It also reflects the poor energy efficiency of its housing stock.
Why are prices rising so fast? The soaring cost of food and energy have been key drivers of inflation. Oil and gas were in greater demand as life got back to normal after Covid. At the same time, the war in Ukraine meant less was available from Russia, putting further pressure on prices.
Which G7 country has the highest inflation? ›Britain has the highest inflation rate in the G7, as the only nation in the group of advanced economies with a reading in double digits after last month's shock increase. With the UK appearing to be an international outlier, some economists have suggested Brexit is having an impact.
Is UK inflation higher than Europe? ›Background: An inflation rate still higher than in the U.S. and Europe. Britain's inflation rate peaked at 11.1 percent in October, the fastest pace since 1981, driven largely by the energy price shock that hit Europe.
Does the UK have the worst inflation? ›Britain has shot up the leader board and now has western Europe's highest rate of consumer price inflation.
Which European country has the highest inflation rate? ›A year earlier, the rate was 7.8%. These figures are published by Eurostat, the statistical office of the European Union. The lowest annual rates were registered in Luxembourg (2.9%), Spain (3.1%) and the Netherlands (4.5%). The highest annual rates were recorded in Hungary (25.6%), Latvia (17.2%) and Czechia (16.5%).
Does Europe or US have higher inflation? ›Demand-Pull Inflation vs. European Cost-Push Inflation. Core inflation, which excludes volatile energy and food prices, has been significantly higher in the U.S. than in Europe. Higher core prices are notable because economists generally consider core inflation data a better predictor of more persistent inflation.
What is the inflation rate in the G7? ›Inflation rates rose all around the world in 2022, so also in the G7 countries, where inflation rates varied from 2.5 percent in Japan to over eight percent in Italy. Inflation rates have been increasing sharply all around the world through 2022, spurred by Russia's invasion of Ukraine in February that year.
Why is the cost of living crisis in the UK? ›Cost pressures have been apparent since mid-2021, driven by a range of issues from depleted gas supplies in Europe to semiconductor shortages in Asia. Impacts from the pandemic alongside disruptions to global supply chains also increased prices.
Why is inflation so high UK 2023? ›
The largest upward contributions to the annual CPIH inflation rate in March 2023 came from housing and household services (principally from electricity, gas and other fuels), and food and non-alcoholic beverages. On a monthly basis, CPIH rose by 0.7% in March 2023, compared with a rise of 0.9% in March 2022.
What is the inflation rate in the US? ›The annual inflation rate in the United States has increased from 3.2 percent in 2011 to 8.3 percent in 2022. This means that the purchasing power of the U.S. dollar has weakened in recent years.
Which country is best at controlling inflation? ›Alongside energy, Switzerland also has stringent controls on the price of goods and services, which also makes them less susceptible to inflation-led fluctuations.
What is the inflation rate in the UK compared to the US? ›The annual inflation in the US for 2021 was 4.7% while the inflation from December 2020 to December 2021 was 7.0%. The latest inflation rate for the United Kingdom announced this month was 4.8% and this was the percent change of their Consumer Price Index (CPI) from December 2020 to December 2021.
Is inflation going down in the US? ›Inflation has been decelerating after peaking at about 9 percent last summer, but the process has been slow. It remains a long way back to the 2 percent inflation that was normal before the onset of the pandemic in 2020.
Does Britain have inflation? ›The 10.1% annual headline inflation figure of Wednesday came in above consensus estimates, and the consumer price index rate sits almost a full percentage point higher than the Bank of England's Monetary Policy Committee projected in its February report.
Why is UK worst in G7? ›Britain has emerged as the worst-performing country in the G7 for workforce participation since the Covid pandemic, after an exodus of half a million people at a time of record levels of long-term sickness.
Why is inflation so bad in England? ›Britain's high rate of energy inflation reflects its heavy reliance on gas for power generation and home heating as well as the poor energy efficiency of its housing stock.
Why is inflation worse in UK? ›Worker shortages and wage rises
The energy price shock is a major driver of the prolonged high inflation in the UK, but it's not the only cause with the UK also having a major worker shortage. During the pandemic, all major countries saw their workforce shrink.
The inflation rate for consumer prices in China moved over the past 35 years between -1.4% and 24.3%. For 2022, an inflation rate of 2.0% was calculated. During the observation period from 1987 to 2022, the average inflation rate was 4.9% per year. Overall, the price increase was 406.44%.
What is the inflation rate in the US in 2023? ›
The annual inflation rate in the US is expected to remain steady at 5% in April 2023, the lowest since May 2021, but still much above the 2.1% average reported from 2000 to 2020. On a monthly basis, the CPI is projected to increase by 0.4%, significantly higher than the 0.1% rise observed in March.
What is the inflation rate in Germany? ›Inflation rate at +7.4% in March 2023.
Why is inflation worse in US than Europe? ›While most of the US inflation rate is driven by its monetary policy, the majority of the European inflation is driven by the short-term volatility of key sectors. For instance, because of the war in Ukraine, natural gas prices in Europe are nearly three times higher than they are in the United States.
Why is inflation high in the US? ›Just as the economy began to level out and supply chain issues started to heal, a major foreign conflict occurred. This caused the perfect storm of demand-pull and cost-push inflation, causing some of the highest inflation rates in history.
Which countries are being hit hardest by inflation? ›- Venezuela — 1198.0%
- Sudan — 340.0%
- Lebanon — 201.0%
- Syria — 139.0%
- Suriname — 63.3%
- Zimbabwe — 60.7%
- Argentina — 51.2%
- Turkey — 36.1%
The CPIH inflation rate is added for comparison. The core CPIH annual inflation rate was 6.2% in April 2023, up from 5.7% in March, which is the highest rate since February 1992. The CPIH all goods index rose by 10.0% in the 12 months to April 2023, down from 12.7% in March.
Which economy has the highest inflation? ›- Republic of Cuba. ...
- Islamic Republic of Iran. ...
- Republic of Haiti. ...
- Democratic Socialist Republic of Sri Lanka. ...
- Republic of Ghana. ...
- Republic of Türkiye. ...
- Republic of Suriname. Latest Annualized Inflation Reading: 55.5% ...
- Republic of the Sudan. Latest Annualized Inflation Reading: 83.6%
Current Canada Inflation Rate: 4.4%
Is the UK becoming too expensive to live? ›The cost of living increased sharply across the UK during 2021 and 2022. The annual rate of inflation reached 11.1% in October 2022, a 41-year high, before easing in subsequent months. It was 10.1% in March 2023, the seventh successive month of double-digit inflation.
Will the UK cost of living crisis end? ›James Smith, research director at the Resolution Foundation, said: “Inflation has finally fallen back into single digits as the energy price shock last spring drops out of the latest annual inflation rate. But the cost of living crisis is evolving not ending – with surging food prices now taking centre stage.
Why is living in the UK so expensive? ›
Wage costs
A key factor in the cost of living will be wage costs. Rising wages will lead to higher cost of services, such as hairdressing and restaurants. The UK has a relatively higher minimum wage than say the US. The new 'living wage' will increase minimum wages even more.
Food retailers have said they expect prices to rise in 2023 overall but with the rate of inflation declining through the year and some products which have seen the sharpest rises falling in price.
How long will high inflation last in UK? ›UK inflation will fall in 2023 but energy bills and taxes will rise as house prices drop. Happy new year | Larry Elliott | The Guardian.
How much will $1000 be worth in 20 years UK? ›Prediction: Value of £1,000 from 2020 to 2040
£1,000 in 2020 is equivalent in purchasing power to about £2,075.95 in 2040, an increase of £1,075.95 over 20 years.
| Rank | Country / Region | Date |
|---|---|---|
| 1 | South Sudan | Dec 2022 |
| 2 | Macau | Nov 2022 |
| 3 | China | Dec 2022 |
| 4 | Hong Kong SAR | Nov 2022 |
The CPI's all time high inflation rate was 13.7% in 1980. The CPI's all time low inflation rate was -1% in 1950. The Core Inflation Rate rose slightly to 5.5% in April 2023 from 5.6%.
How do you beat inflation? ›- Treasury Inflation Protected Securities (TIPS) ...
- Index Funds. ...
- Commodities. ...
- Start a Business. ...
- Lock in Higher Interest Rates on Cash Accounts. ...
- Lock in Lower Fixed Rates on Debt. ...
- Invest in Good Businesses with Low Capital Needs. ...
- Avoid Traditional Bonds.
The Federal Reserve seeks to control inflation by influencing interest rates. When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down.
What country kept printing money? ›Germany. Prohibited from making payments in their own currency, the Germans had no choice but to trade it for an acceptable "hard currency" at unfavorable rates. As they printed more currency to make up the difference, the rates worsened, and hyperinflation quickly took hold.
Who can defeat inflation? ›What is the best way to hedge against inflation? The best way to hedge against inflation is to diversify your investment portfolio. You will beat inflation if the returns from your investments exceed the inflation rate. Good investments to hedge against inflation include real estate, bonds, and gold.
Is inflation over 10% in the UK? ›
LONDON (AP) — The price of food in the U.K. rose at the fastest pace in 45 years last month in, keeping inflation above 10% for a seventh straight month amid a cost-of-living crisis that has fueled a wave of strikes by government workers.
Is the UK in inflation or deflation? ›the UK economy is expected to face a prolonged recession with declining growth and increased unemployment in 2023-24, causing deflation (of course this could also cause problems for Sunak's pledge to boost economic growth)
How bad is inflation right now 2023? ›The numbers are here: In April 2023, inflation rose by 4.9% compared to this time last year. That's slightly lower than the 5% we saw in March, which means it's gone down slightly on an annual basis. In fact, it's been slowing now for ten months straight.
Will grocery prices go down in 2023? ›Food prices are expected to grow more slowly in 2023 than in 2022 but still at above historical-average rates. In 2023, all food prices are predicted to increase 6.5 percent, with a prediction interval of 4.9 to 8.2 percent.
Will the economy get better in 2023? ›The baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023.
What 3 countries have the highest inflation rate? ›- Republic of Cuba. ...
- Islamic Republic of Iran. ...
- Republic of Haiti. ...
- Democratic Socialist Republic of Sri Lanka. ...
- Republic of Ghana. ...
- Republic of Türkiye. ...
- Republic of Suriname. Latest Annualized Inflation Reading: 55.5% ...
- Republic of the Sudan. Latest Annualized Inflation Reading: 83.6%
Price-watchers are now focused on core inflation, a measure that strips out volatile food and energy prices, and is usually much slower to rise—and more difficult to bring down. Since October, core inflation in the euro zone has been higher than in America.
Which countries are likely to have the highest inflation rate? ›When inflation rates get higher than wage growth, it can cause severe economic complications. Countries with the highest inflation rates often find it difficult to afford basic necessities such as food prices, energy costs, and clothing.
Is the rate of inflation in the UK? ›The CPIH inflation rate is added for comparison. The core CPIH annual inflation rate was 5.7% in March 2023, unchanged from February. The CPIH all goods index rose by 12.7% in the 12 months to March 2023, down from 13.4% in February.
Who has the highest inflation rate in Europe? ›The highest annual rates were recorded in Hungary (25.6%), Latvia (17.2%) and Czechia (16.5%).
Is US inflation at an all time high? ›
Inflation Rate in the United States averaged 3.30 percent from 1914 until 2023, reaching an all time high of 23.70 percent in June of 1920 and a record low of -15.80 percent in June of 1921.
Is there high inflation in the US? ›U.S. inflation is at an all-time high. Read on to learn more. Americans and citizens worldwide have witnessed inflation rates soar over the last two years. The past year saw inflation climb to a 40-year high.
What country has worst inflation? ›- Venezuela — 1198.0%
- Sudan — 340.0%
- Lebanon — 201.0%
- Syria — 139.0%
- Suriname — 63.3%
- Zimbabwe — 60.7%
- Argentina — 51.2%
- Turkey — 36.1%
- May 17, 2023, 03:30 PM IST. 5 Countries with the highest inflation rate in 2023. ...
- In these countries, inflation hit the hardest and the inflation rate crossed 100 per cent.
- Argentina-100% ...
- Syria-140% ...
- Zimbabwe: 172.2% ...
- 2.Lebanon: 264% ...
- Venezuela: 400%