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UK inflation rises more than expected in April to 1.8 percent

Published 20/05/2014, 09:37

LONDON, May 20 (Reuters) - British inflation in April rose more than expected from its lowest level in more than four years as the Easter holidays pushed up the cost of travelling, official data showed on Tuesday.

The consumer price index rose to an annual rate of 1.8 percent last month from 1.6 percent in March, according to the Office for National Statistics.

Economists in a Reuters poll had expected the index to rise by 1.7 percent.

Higher airfares and other transport costs, including a stronger reading of fuel prices compared with a year ago, helped push up inflation in April.

Offsetting that pressure was weaker price growth in food as a mild spring kept vegetable prices down, the ONS said.

Core CPI, which excludes food costs and other items, rose 2.0 percent, its strongest rate since September last year.

House prices were up 8.0 percent on the year in March, slowing from a 9.2 percent rise in February, the ONS also said.

Prices in London were 17 percent up on the year, less than a 17.8 percent increase in February which had been their biggest increase since 2007.

Bank of England Governor Mark Carney said in an interview broadcast on Sunday that the housing market posed the biggest risk to Britain's economic recovery.

The low level of consumer prices in Britain is helping the BoE as it signals it is likely to keep interest rates at a record low level of 0.5 percent, despite economic growth that is set to hit about 3 percent this year.

Before December last year, annual inflation exceeded the central bank's 2 percent target every month since December 2009, eroding the spending power of households.

Last week, the BoE said inflation - which has been pushed down in part by an appreciation of the pound - was likely to remain below its target in two years' time.

Weaker price growth is helping wages to recover some of their value lost since the financial crisis.

Average weekly earnings rose 1.7 percent in the three months to March.

Data released alongside the CPI by the ONS on Tuesday showed that factory gate inflation in April was flat compared with March and in year-on-year terms rose 0.6 percent. Both readings were slightly below economists' predictions.

(Reporting by William Schomberg and Ana Nicolaci da Costa)

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