While still stubbornly high, inflation for April 2023 fell to its lowest rate since March last year, as the impact of rising energy costs subsides.
In the 12 months to April 2023, inflation measured by the consumer prices index (CPI) was 8.7%, down from 10.1% in the year to March, according to new data from the Office for National Statistics. Many commentators had expected a fall to around 8.2%.
Inflation April 2023
Pay settlements in April remain at 6%
Annual CPI including owner-occupier housing costs (CPIH) stood at 7.8% in April 2023, down from 8.9% in March.
But the retail prices index (RPI), no longer an official statistic though still the inflation measure most-used by trade unions in pay negotiations, remained in double digits at 11.4% in the 12 months to April 2023, 2.1 percentage points lower than the previous month (13.5%).
The inflation figures come as data from XpertHR, which monitors thousands of pay settlements in the UK, showed that the median basic pay increase in the three months to April 2023 remained at 6%.
The ONS said that electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation in April as last year’s increases, caused by the Russian invasion of Ukraine, dropped out of the annual comparison.
Food and non-alcoholic beverage prices continued to rise but have plateaued from 19.2% in the year to March 2023, to 19.1% in the year to April 2023.
Chancellor Jeremy Hunt said: “The International Monetary Fund 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.”
James Smith, research director at the Resolution Foundation think tank, 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.
“Surging food prices are particularly painful for low-income families, three in five of whom are already reporting that they are having to cut back on food and other essentials.”
TUC general secretary Paul Nowak said: “Prices are still rising much faster than wages. And families cannot restore their lost living standards without stronger wage growth.
“But Rishi Sunak does not have a plan to get wages rising. And he wants to sack workers who use their right to strike to get a fair pay deal.
“We all want inflation to fall faster. But working families are also suffering from this government’s failure to get wages growing. This needs to change too.”
Alpesh Paleja, CBI lead economist, said: “Inflation was always likely to fall in April, as the comparison was against a big rise in Ofgem’s energy price cap this time last year. Inflation should continue to fall in the months ahead, thanks to base effects unwinding further and a more benign outlook for global energy prices. But it’ll take a while for people to feel this in their pockets, particularly with food price inflation and generalised inflationary pressures still strong.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
“Easing price pressures means that the Bank of England is probably close to the peak in its rate tightening cycle. But the stickiness in domestic price pressures, such as wage growth, is something that it is keeping a close eye on. Should this persist, especially against the backdrop of resilience in economic growth, it might prove too early to call time on rate rises just yet.”
Reward, compensation and benefits opportunities
Browse all comp and benefits jobs
