The annual inflation rate in Britain fell sharply to its lowest level in 13 months, recording 8.7 percent in April, but prices are still high in the midst of a crisis in the cost of living in the country, according to official data showed on Wednesday.
The rate of price increase slowed after it reached 10.1 percent in March, which contributed to reducing inflation to below 10 percent for the first time since August last year, according to a statement from the Office for National Statistics.
The rate of 8.7 percent is the lowest inflation rate since March of last year, when it settled at 7 percent.
British Central Bank Governor Andrew Bailey said in a webinar organized by the Wall Street Journal that the data released on Wednesday showed a “welcome drop below the 10% threshold”.
He pointed out that the Board of Governors of the British Central Bank “expected a decline because we have seen an impact on an annual basis due to the decline in energy prices” after they reached their peak last year due to the impact of the war in Ukraine.
However, the chief economist in the office, Grant Fitzner, indicated that “prices in general are still much higher than they were last year, as annual food price inflation is close to its highest historical rates.”
Despite this sharp decline, experts suggest that the British Central Bank, “Bank of England”, will raise interest rates again at its next meeting, because the April data is higher than the rate of 8.4 percent that the central bank had expected last month.
Britain’s annual inflation rate is the highest among the G7 countries, which include the world’s richest economies and include, in addition to the United Kingdom, Canada, France, Germany, Italy, Japan and the United States.
The central bank’s 2 percent target for inflation remains a long way off, while the UK government expects it to drop to around 5 percent by the end of the year.
Fitzner said that the inflation rate “decreased significantly last month, as the energy price increases that were recorded last year did not repeat … but this was partially offset by the increase in the prices of used cars and cigarettes.”
The release of the data comes the day after the International Monetary Fund modified its forecasts for the British economy, indicating expected growth this year, a month after it expected an economic contraction in the United Kingdom.
The fund now expects the British economy to grow by 0.4 percent in 2023, noting that the decline in energy prices is one of the factors for this growth.
Thus, the Fund revised its previous forecast, which dates back to April, which spoke of a contraction of 0.3 percent.
After the release of the data on Wednesday, British Finance Minister Jeremy Hunt said, “The International Monetary Fund said yesterday that we have moved decisively to tackle inflation, but despite the positive drop to below ten percent, food prices are still rising very quickly.”
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