British 12-month inflation jumps to 4.5% in April

17th May 2011, Comments 0 comments

British inflation leapt to 4.5 percent in April, hitting the highest level for two and a half years, boosted by rising travel costs during the Easter holiday break, official data showed on Tuesday.

Consumer price index (CPI) inflation was driven last month by the rising cost of transport, alcoholic drinks, tobacco, and domestic gas and electricity, the Office for National Statistics (ONS) said in a statement.

"CPI annual inflation -- the government's target measure -- was 4.5 percent in April, up from 4.0 percent in March," the ONS added.

"The last time CPI annual inflation was higher was September 2008 when it stood at 5.2 percent -- the record high for CPI."

The April figure compared with market expectations for a year-on-year rise to 4.2 percent, according to analysts polled by Dow Jones Newswires.

The ONS said the data was influenced by the timing of the Easter holiday break, when ticket prices are traditionally higher for air, sea and rail travel.

"The timing of Easter in 2011 had a significant impact on certain travel costs included in the CPI due to the collection periods for air transport, sea transport and international rail travel including the Easter holidays.

"Easter in 2010 was much earlier and did not affect the April 2010 CPI," it added.

Inflation over 12 months has now held above the Bank of England's official target rate of 2.0 percent since late 2009.

In recent months, inflation has also been propelled by surging world oil prices and a recent increase in government sales tax.

The Bank of England had warned last week that inflation could reach 5.0 percent this year because of soaring domestic energy costs, high oil prices and the government's sales tax rise.

The BoE held interest rates at a record low 0.50 percent earlier this month as it balanced high inflation with tepid economic growth. Britain is a member of the European Union but not of the eurozone.

The Bank of England, and also the European Central Bank for the eurozone, set a target for inflation of no more than 2.0 percent because experience shows that once inflation rises above this level, businesses and consumers begin to anticipate further price rises, generating what is known as second-round inflation.

© 2011 AFP

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