UK inflation falls to lowest level in nearly three years

UK inflation has fallen to its lowest level in nearly three years, driven primarily by significant reductions in gas and electricity prices.

According to the Office for National Statistics (ONS), prices rose by 2.3% in the year to April 2024, down from 3.2% the previous month.

This marks a significant decrease from the October 2022 peak of 11.1%, which was the highest rate in over 40 years.

Despite this positive development, inflation remains slightly above the Bank of England’s target of 2%. The ONS data highlights that while prices are still rising, they are doing so at a slower rate.

The easing in the annual inflation rate is largely attributed to price changes in the housing and household services division, particularly for gas and electricity.

The report notes that the prices of electricity, gas, and other fuels fell by 27.1% in the year to April 2024, the largest fall on record since 1989.

Gas prices saw a dramatic 37.5% drop compared to the previous year, while electricity prices fell by 21.0%.

These reductions were influenced by the lowering of the Office of Gas and Electricity Markets (Ofgem) energy price cap in April 2024.

For an average household paying by direct debit for dual fuel, this equates to £1,690, a fall of £238 over the course of a year.

In addition to energy prices, other sectors also contributed to the easing inflation. Prices for food and non-alcoholic beverages rose by 2.9% in the year to April 2024, down from 4.0% the previous month.

This is the lowest annual rate since November 2021 and marks the 13th consecutive month of easing from a high of 19.2% in March 2023, the highest annual rate in over 45 years.

ONS Chief Economist Grant Fitzner commented on the figures, stating, “There was another large fall in annual inflation led by lower electricity and gas prices, due to the reduction in the Ofgem energy price cap.”

“Tobacco prices also helped pull down the rate, with no duty changes announced in the budget.”

“Meanwhile, food price inflation saw further falls over the year. These falls were partially offset by a small uptick in petrol prices.”

Trade Union Congress General Secretary Paul Nowak said:

“The cost of living crisis is not over – no matter how much ministers pretend it is.

“Prices are still going up. Food and energy bills are much higher than a couple of years ago. And many are being hit by soaring mortgage repayments.

“While it’s good the inflation rate is lower, millions up and down the country are still having to cut back on everyday essentials as they struggle to make ends meet.

“That’s because household budgets have been decimated by the highest price rises in the G7 and wages have flatlined over the last 14 years.

“Pay packets are still worth less today than in 2008, with working people on course to end this parliament poorer than at the start.

“Make no mistake – the Tories have delivered the worst period for living standards in generations.”