LONDON (Reuters) - British inflation hit its highest level since September 2013 last month, extending its sharp rise since the vote to leave the European Union and tightening the squeeze on living costs as a national election approaches.

Consumer prices rose by an annual 2.7 percent, data showed, and they look set to rise further due to the fall in the value of the pound and the recent rise in global oil prices.

Britain’s economy was barely ruffled last year by the shock vote to leave the EU. But the steady rise in inflation since then, combined with weak wage growth, has slowed its momentum this year.

The opposition Labour Party on Tuesday sought to highlight rising costs for voters as it launched its policy proposals for the June 8 election, pledging a higher minimum wage and state involvement in the energy sector to keep prices down.

Last week, Bank of England (BoE) Governor Mark Carney warned 2017 will be challenging for consumers, with inflation now almost certain to overtake wage growth.

“The last thing Britain needs is another real wage slump. But rising prices are hammering pay packets,” Trades Union Congress General Secretary Frances O’Grady said.

Prime Minister Theresa May called the snap election last month to strengthen her mandate to negotiate Britain’s exit from the European Union. But living standards are a big campaign issue, pushing her party into a promise to cap energy prices that breaks with its usually pro-market agenda.

Despite the rise in inflation, however, the economy is far from overheating, and all but one of the BoE’s eight policymakers voted last week to keep interest rates on hold.

A man browses a market stall in London, Britain May 16, 2017. REUTERS/Neil Hall

AIRFARES SWING IN EASTER

The latest inflation figures were boosted most of all by rising airfares during the Easter holidays which last year took place in March. Rising clothing prices, higher car tax and electricity also pushed up consumer prices.

Many economists see more inflation ahead.

“We remain convinced that the market is underestimating the further upside for inflation from here,” Scotiabank analyst Alan Clarke said. He expects utility bills, food costs and the weak pound to put more pressure on prices in future.

Sterling briefly spiked to its highest in almost a week against the dollar before falling back.

Many economists say the impact of the fall in sterling on consumer prices will be felt more strongly in the coming months, and the central bank expects inflation to peak at nearly 3 percent by the end of this year.

Capital Economics said it expected inflation to exceed 3 percent before the end of the year but saw little sign of domestic inflation pressures becoming entrenched.

Excluding oil prices and other volatile components such as food, core consumer price inflation rose to 2.4 percent, the strongest rate since March 2013 and above economists’ expectations for a 2.2 percent rise.

Slideshow (7 Images)

Services prices - which the BoE uses as a guide to domestic inflation pressures - rose by 3 percent, also the biggest jump since September 2013, pushed up by the higher air fares.

The ONS said house prices in March rose at their weakest rate since October 2013, up 4.1 percent on the year. Prices in London rose 1.5 percent, the weakest since March 2012.</s>Inflation hit the highest level in four years during April, beating forecasts and likely ending a two-year period of real wage growth according to the latest inflation figures from the Office for National Statistics.

Prices were 2.7 per cent higher than the same month a year ago, up from 2.3 per cent during March. The latest labour market data found that wages grew by 2.3 per cent in the three months to February.

The jump in inflation was mainly driven by air fares – they increase during the Easter holidays, which this year fell in April rather than March. Analysts had expected inflation to increase to 2.6 per cent.

The retail price index, which is no longer used as an official measure of inflation but is used for some inflation-linked bonds, increased to 3.5 per cent from 3.1 per cent.

Stagnant living standards have been the post-financial crisis norm in the UK, except for a brief period when falling oil prices helped to lift incomes in real terms. The latest data suggest that this growth is now over.

Clothing and electricity prices also rose at a faster rate during April while changes to certain car taxes also helped to push up the rate of inflation.

The rate of inflation is now above the Bank of England’s 2.65 per cent forecast for the entirety of the second quarter of 2017.

Input prices, a measure of the costs faced by businesses, grew by 16.6 per cent during the month. This is the third consecutive month of slowing growth since the cost inflation peaked at 19.9 per cent in January.

Increases have been mainly driven by crude oil as the effect of a fall in the price drops out of the figures but sterling’s weakness since the EU referendum has also helped drive up import prices.

An increase in the value of the pound since a snap general election was called has helped to moderate some of this effect.

The ONS also found that inner London house prices have fallen sharply in recent months. The price of an average house in London is now around 2 per cent lower than in July 2016, according to the data.</s>British inflation rose to its highest level since September 2013 last month, according to official data on Tuesday that underlined a growing squeeze on households ahead of the June 8 national election.

Consumer prices increased in April by 2.7 per cent compared with a year earlier, the Office for National Statistics said, slightly above economists’ expectation for a 2.6 per cent annual rise in a Reuters poll.

Inflation has accelerated in Britain in recent months, pushed up by a weakening of the pound since last year’s decision by voters to leave the European Union, and by the rise in oil prices which has fuelled inflation in other countries too.

Last week Bank of England Governor Mark Carney warned this year would be challenging for consumers, saying that wages are about to fall in real, inflation-adjusted terms.

But with little sign of an overheating domestic economy, all but one of the BoE’s eight policymakers voted last week to keep rates on hold.

The latest inflation figures were boosted most of all by rising airfares during the Easter holidays, which were in March last year. Rising clothing prices, higher car tax and electricity also pushed up consumer prices.

Many economists say the impact of the fall in sterling on consumer prices will be felt more strongly in the coming months, and the central bank expects inflation to peak at nearly 3 per cent by the end of this year.

Excluding oil prices and other volatile components such as food, core consumer price inflation rose to 2.4 per cent, the strongest rate since March 2013 and above economists’ expectations for it to rise to 2.2 per cent.

Services prices – which the BoE view as a guide to domestic inflation pressures – rose by 3.0 per cent, the biggest jump since September 2013, though this was affected by higher air fares.

Factory output prices – a guide to future consumer price pressures – increased 3.6 per cent, unchanged from the previous month and above forecasts of a 3.4 per cent annual increase in the Reuters poll.

Prices paid by factories for materials and energy rose at the weakest annual pace since November, up 16.6 per cent.

The ONS said house prices in March rose at their weakest rate since October 2013, up 4.1 per cent on the year.

Prices in London alone grew just 1.5 per cent, the weakest since March 2012.</s>LONDON (AP) — Britain’s consumer price inflation rate rose to 2.7 percent in April from 2.3 percent a month earlier, as the pound’s drop since Britain’s vote to leave the European Union continues to push up the cost of everyday goods.

The Office for National Statistics said Tuesday that the annual rate is the highest since September 2013.

Rising prices for clothing, electricity and airfares contributed to the increase.

The Bank of England said last week that rising inflation driven by the market turmoil over Brexit was starting to hurt consumers, and wages were failing to keep up.

The bank expects inflation to hit 3 percent later this year then ease back down, and wages to pick up in 2018 — if Britain gets a new trade deal with the EU.</s>UK's April inflation at its highest since September 2013; Bank of England expects it to peak at 3%

UK's inflation rate rose last month to its highest since September 2013, official figures show. Inflation now stands at 2.7% - up from 2.3% in March - and above the Bank of England's 2% target. The main reason was higher air fares, which rose because of the later date of Easter this year compared with 2016.

Rising prices for clothing, vehicle excise duty and electricity also played a part, but a fall in the price of petrol and diesel slightly offset this. Last week, the Bank of England warned that inflation as measured by the Consumer Prices Index (CPI) would peak at just below 3% this year.

It also warned that 2017 would be a more challenging time for British households with inflation rising and real wages falling - leading to a consumer spending squeeze.

Pay including bonuses rose at an annual rate of 2.3% in the three months to February, according to the ONS. The latest figures on earnings growth are due out later this week.

The Office for National Statistics, ONS, said the cost of air travel went up by 18.6% from the month before, with Easter falling on 16 April this year compared with 27 March last year. The price of clothes jumped to the highest level for six years, with a rise of 1.1% between March and April. Electricity and food prices also went up, but there were falls in the cost of gas, petrol and diesel.

The Retail Prices Index (RPI), a separate measure of inflation which includes council tax and mortgage interest payments, reached 3.5% last month, up from 3.1% in March.

The ONS's new preferred inflation measure of CPIH, which contains a measure of housing costs, rose to 2.6% from 2.3% in March.

Suren Thiru, head of economics at the British Chambers of Commerce, said: Businesses continue to report that the substantial increases in the cost of raw materials and other overheads over the past year are still filtering through the supply chain, and are therefore likely to lift consumer prices higher in the coming months.

However, it remains probable that the current period of above target inflation is transitory in nature, with little evidence that higher price growth is becoming entrenched in higher pay growth. This should give the Bank of England sufficient scope to keep interest rates on hold for some time yet”</s>Inflation hit a three-and-a-half-year high last month as the Brexit-hit pound and the timing of the Easter holidays pushed up the cost of living.

The Office for National Statistics (ONS) said the consumer prices index (CPI) measure of inflation reached 2.7 per cent in April, the highest rate since September 2013.

The rise keeps the rate above the Bank of England’s 2 per cent target for the third month in a row and comes after CPI paused at 2.3 per cent in February and March.
• READ MORE: BoE eyes ‘moderate’ growth as rates left on hold

CPI stood at just 0.3 per cent a year ago, and Chris Leyland, deputy chief investment officer at investment firm True Potential, said the reading for last month marks the largest year-on-year increase for inflation in a decade.

The Bank of England said in its inflation report last week that CPI would peak at 3 per cent later this year, as the pound’s slump since the Brexit vote causes price tags on everyday items to tick higher.

Royal Bank of Scotland chief economist Stephen Boyle said: “Rising inflation is the major economic story of 2017. While it is by no means a return to the bad old days of the 1970s, when inflation reached 27 per cent, or even the 1990s, when it averaged over 3 per cent, higher inflation matters. Wages are growing by around 2 per cent year-on-year, which means that 2.7 per cent inflation is eroding our spending power.

“As a result, consumers’ spending will be under pressure, especially for discretionary items like leisure. Weaker consumption means slower growth.”

He added: “However, there is an upside to the weaker pound and its inflationary impact: our exports become more competitive in overseas markets. That boost, along with the pick-up in growth in Europe will mean stronger export performance in 2017, partly offsetting weaker domestic demand.”

The main upward impact on the cost of living came from air fares, which jumped by 18.6 per cent month-on-month in April due to the impact of the Easter holidays. Airline prices rise sharply around the Easter break, which fell on 16 April this year rather than 27 March in 2016.

Own an innovative start-up? Find out how to win £5,000 for your business

The price of clothes also rose to the highest level for six years, climbing by 1.1 per cent between March and April after falling by 0.4 per cent a year ago.

The ONS said the timing of when shops put items on sale may have caused prices to jump, with the number of discounted items falling between March and April this year after rising slightly a year ago.

Food prices also became more expensive in April, rising 0.2 per cent month-on-month after coming in flat last year.

The way the ONS measures prices means Npower and Scottish Power’s decision to increase gas and electricity prices in March also had an upward impact on the headline rate.

The overall price of electricity rose by 2.5 per cent month-on-month after falling by 0.2 per cent a year ago, but the rise was partly offset by a cap placed on prepayment meter charges. Despite the price hikes from some utility companies, gas prices dropped by 0.6 per cent over the period.

200 Voices: find out more about the people who have shaped Scotland

The downward pressure on the cost of living came from fuel pump prices, with petrol falling by 1.8p to 117.4p a litre and diesel also dropping by 1.8p to 120.3p.

The CPI including owner occupiers’ housing costs (CPIH) hit its highest level since June 2013 at 2.6 per cent in April, up from 2.3 per cent in March. CPIH is the ONS’s preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.

The retail prices index, a separate measure of inflation that includes council tax and mortgage interest payments, reached 3.5 per cent last month, up from 3.1 per cent in March.

Despite inflation running well above its target, Boyle said he did not expect the Bank of England to raise interest rates above their current level of 0.25 per cent “any time soon”.

“It will be content to regard sterling-induced inflation as being a temporary phenomenon as long as our expectations of future inflation remain consistent with the 2 per cent target and wage growth does not rise unduly. Both of these conditions are being satisfied at present.”

But Nick Dixon, investment director at Edinburgh-based Aegon, said members of the Bank’s monetary policy committee would be under more pressure to “pull the lever” on rates, following recent hikes from the US Federal Reserve.

“Despite a downgraded growth forecast in the UK economy, it may only take a more stable outlook after the general election for the Bank of England to follow suit,” Dixon said.

Click here to ‘Like’ The Scotsman Business on Facebook</s>LONDON, May 16 (Reuters) - British inflation hit its highest level since September 2013 last month, building on its sharp rise since the vote to leave the European Union and tightening the squeeze on living costs for households ahead of a national election on June 8.

Consumer prices rose in April by an annual 2.7 percent, the Office for National Statistics said on Tuesday, and economists said inflation would climb further as the fall in the value of the pound since the Brexit vote pushes up the cost of imports.

Economists taking part in a Reuters poll had predicted a rise of 2.6 percent.

Much of the rise in April was due to the late timing of the Easter holiday which pushed up air fares. But the combination of sterling's fall and higher oil prices are pushing up inflation across the board for consumers and businesses.

Last week Bank of England Governor Mark Carney warned this year would be challenging for consumers, saying that wages are about to fall in real, inflation-adjusted terms.

The head of Britain's biggest trade union group said Tuesday's inflation data meant living standards should be front and centre of the election campaign.

"The last thing Britain needs is another real wage slump. But rising prices are hammering pay packets," Trades Union Congress General Secretary Frances O´Grady said.

"Working people are still 20 pounds a week worse off, on average, than they were before the (financial) crash. That´s why living standards must be a key battleground at this election."

Prime Minister Theresa May is widely expected to defeat the opposition Labour Party which is calling for an end to strict limits on public sector pay growth and higher minimum wage.

Despite the inflation rise, however, the economy is far from overheating -- meaning that all but one of the BoE's eight policymakers voted last week to keep interest rates on hold.

The latest inflation figures were boosted most of all by rising airfares during the Easter holidays which last year took place in March. Rising clothing prices, higher car tax and electricity also pushed up consumer prices.

One-off effects aside, some see more inflation ahead.

"We remain convinced that the market is underestimating the further upside for inflation from here," Scotiabank analyst Alan Clarke said, adding that he expected utility bills, food costs and the weak pound to put more pressure on prices in future.

Sterling briefly spiked to its highest in almost a week against the dollar before falling back.

Many economists say the impact of the fall in sterling on consumer prices will be felt more strongly in the coming months, and the central bank expects inflation to peak at nearly 3 percent by the end of this year.

Capital Economics said it expected inflation to exceed 3 percent before the end of the year but saw little sign of domestic inflation pressures becoming entrenched.

Excluding oil prices and other volatile components such as food, core consumer price inflation rose to 2.4 percent, the strongest rate since March 2013 and above economists' expectations for it to rise to 2.2 percent.

Services prices - which the BoE uses as a guide to domestic inflation pressures - rose by 3.0 percent, the biggest jump since September 2013, pushed up by the higher air fares.

Factory output prices - a guide to future consumer price pressures - increased 3.6 percent, unchanged from the previous month and above forecasts of a 3.4 percent annual increase in the Reuters poll.

Prices paid by factories for materials and energy rose at the weakest annual pace since November, up 16.6 percent.

The ONS said house prices in March rose at their weakest rate since October 2013, up 4.1 percent on the year. Prices in London alone grew 1.5 percent, the weakest since March 2012.</s>Inflation rose sharply in April as price rises continued to drag on the British consumer.

The consumer price index, the measure used by the Bank of England, increased at an annual rate of 2.7 per cent in April, up from the 2.3 per cent seen in March, according to the Office for National Statistics (ONS).

Economists had expected consumer price index inflation to jump further above target to a consensus of around 2.6 per cent.

Meanwhile the consumer price index including owner occupiers’ housing costs, which the ONS has designated as its main measure, rose to 2.6 per cent.

The Bank of England now expects real wages to fall this year as inflation outpaces pay increases.

The fall in the value of the pound since the EU referendum has driven the rapid rise in prices. Sterling crashed to its lowest level against the US dollar in more than three decades in the aftermath of the vote.

However, a recent rebound in the value of the pound to just below $1.30 against the dollar has slightly cushioned the blow. The pound was trading around 14 per cent below pre-referendum highs just before the inflation data was released.

The recent rebound prompted the Bank of England to predict inflation will peak earlier, which the latest data appear to have borne out.

The producer price index (PPI), which measures the price of goods at the factory gate, rose by 3.6 per cent, the same pace as seen in March.

Higher factory gate prices are generally passed on to consumers, although some of the increase is also absorbed in company margins. Stalling factory gate prices may mean momentum in the rise of consumer inflation could also slow.

Nevertheless, the rise will add further pressure on the monetary policymakers at the Bank, who have determinedly maintained a looser grip on the supply of money, with interest rates remaining at historically low levels.

However, the Bank has had to contend with inflation rising well beyond its target level of two per cent. It has already upped its forecasts from previous levels, with it now expecting inflation to peak just below three per cent by the end of the year.</s>LONDON (dpa-AFX) - UK inflation accelerated to the highest since 2013 largely due to higher air fares in April. 



Inflation rose more-than-expected to 2.7 percent in April from 2.3 percent in March, data from the Office for National Statistics showed Tuesday. Inflation was forecast to rise to 2.4 percent. 



On a monthly basis, consumer prices gained 0.5 percent, faster than the expected 0.4 percent.



Core inflation that excludes energy, food, alcoholic beverages and tobacco accelerated to 2.4 percent from 1.8 percent. 



The consumer price index including owner occupiers' housing costs advanced 2.6 percent annually, faster than the 2.3 percent increase in March.



Factory gate prices have grown for 15 consecutive months to April 2017 despite raw material costs being relatively flat since January 2017, the ONS said in a separate communique.



Month-on-month, output price inflation held steady at 0.4 percent. Likewise, the annual growth in factory gate prices remained at 3.6 percent in April. 



Input price inflation moderated to 16.6 percent from 17.4 percent in March. On a monthly basis, input prices edged up 0.1 percent after staying flat in March.



Copyright RTT News/dpa-AFX</s>Rome, May 15 - Italy's annual inflation rate rose to 1.9% in April, up from 1.4% in March, according to ISTAT's flash estimate released on Monday. It is necessary to go back to January 2013, when the inflation rate was 2.2%, to find a higher figure. The national statistic agency added that its consumer price index was up 0.4% in month-on-month terms. The inflation leap was due to a 5.4% rise in electrical power prices and natural gas (+5.9%), as well as transport services (+5.5%). Codacons consumer group said a 1.9% inflation rate would translate into higher spending of 570 euros a year for he average household. The national consumers' union (UNC) put the figure for a family with two children at 772 euros.
The Office for National Statistics in the United Kingdom states that consumer prices in Britain rose by an annualized 2.7% in April, the highest level of inflation in almost four years.