Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

CPI resumes slide after Easter spike

CPI resumes slide after Easter spike

Consumer price Inflation resumed its long-term slide in May, falling back to 1.5% after April’s brief Easter-related spike to 1.8%.

Emphasising the rebasing effect of the 2013 figures on this year’s relatively late Easter holiday, falls in transport costs, particularly air fares, were a large contributor to the fall.

Excluding April, CPI inflation has now been sliding for 12 months from a peak of 2.9% in June last year, against a wider backdrop of moderating resource prices and a relatively strong pound.

Output inflation also continued to moderate with core factory gate prices up 0.5% compared to 0.6% in the 12 months to April, in a demonstration of the weakness of pressure across the supply chain.

Capital Economics’ UK economist Samuel Tombs said that the continued weakness of inflation suggested that recent hawkishness from Bank of England policymakers may not be sustained.

‘We believe the MPC is likely to tread cautiously and raise interest rates only very gradually over the coming years,’ said Tombs.

‘It continues to look likely that CPI inflation will ease further, perhaps to as low as 1% by the end of the year. For a start, sterling's further appreciation points to a continued easing of core goods inflation over the rest of this year.

‘A combination of political pressure and recent sharp falls in wholesale prices should ensure that any rises in consumer energy bills later this year are much smaller than seen last winter. And while these downward influences on inflation will be temporary, we still believe there is considerable scope for productivity growth to pick up, keeping inflation low over the medium term.’

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Brewin's Gutteridge: Yuan direction

Brewin's Gutteridge: Yuan direction

This week Brewin Dolphin's research head chats to Fidelity Asian Investment Directors Jenny Lee and Gary Monaghan about the big changes in China.

Play On the Road Challenge: horsing around on the polo pitch

On the Road Challenge: horsing around on the polo pitch

Libby Ashby takes to the polo pitch with Stuart Leigh-Davies from Redmayne-Bentley for an 'On the Road' challenge.

Brewin's Gutteridge: where Miton's Godber sees value

Brewin's Gutteridge: where Miton's Godber sees value

This week Brewin Dolphin's research head talks to George Godber, co-lead fund manager of the Miton UK Value Opportunities fund, about value investing.

Your Business: Cover Star Club

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Profile: what tempted Brewin's Glasgow team over to Rathbones?

Rathbones’ Glasgow office has only been open for three months but the team, led by Angus Kerr, has already attracted new clients

Wealth Manager on Twitter