Inflation subsides, reducing interest rate fears
Published On 15 May 2007
After it reached record levels last month, consumer price index (CPI) inflation fell in April, official figures suggest.In March, CPI inflation reached 3.1 per cent - over one per cent above government targets - sparking fears that interest rates would have to be significantly increased to curb inflationary pressure on the UK economy.
However, figures released by the Office of National Statistics (ONS) show that CPI inflation fell back last month to 2.8 per cent.
The main downward pressure on inflation came from reductions in typical consumer utility bills and also from cheaper financial services.
However, the ONS noted that there was still inflationary pressure from increases in the costs of clothing and restaurant and cafe meals.
Despite the fall in April, UK inflation remains above government targets and the EU average - which is currently approximately 2.2 per cent.
However, mortgage borrowers will welcome the CPI fall as it decreases the likelihood of another interest rate rise when the Monetary Policy Committee meets in June.
