Brexit Britain’s inflation rate falls below that of the EU27

Pre-election good news for Rishi Sunak - UK : 2.3% versus EU27: 2.6%

Montage © Facts4EU.Org 2024

Despite the Bank of England, inflation falls again

With the news now being dominated by the impending general election on 04 July, Facts4EU compares the latest inflation news on Wednesday (22 May 2024) with that of the EU27.

The Office for National Statistics released its estimates for inflation for the UK, showing a dramatic fall from 3.2% down to 2.3%.

Brexit Facts4EU.Org Summary

Consumer price inflation April 2024

UK Consumer Price Inflation : 2.3%
EU Consumer Price Inflation : 2.6%

[Sources : ONS | EU Commission (Eurostat).]

The historical picture

The inflation rate has been falling dramatically in the last two years. Despite this the Bank of England has kept interest rates high. Below we give readers the picture over the past two years, using official ONS data.

Brexit Facts4EU.Org Summary

UK consumer price inflation April 2022 – April 2024

UK CPI in April 2022 : 9.0%
UK CPI in April 2024 : 2.3%

[Source : Office for National Statistics.]

So why don’t people feel better off?

The easing in the annual inflation rates in April 2024 principally reflected price changes in the housing and household services division, particularly for gas and electricity. There were also large downward effects from alcohol and tobacco, food and non-alcoholic beverages, recreation and culture, and communication. Restaurants and hotels, and miscellaneous goods and services provided small, partially offsetting, upward contributions.

Here are the details :-

Food and non-alcoholic beverages : 2.9%
Alcohol and tobacco : 8.0%
Clothing and footwear : 3.7%
Housing and household services : 2.0%
of which owner occupiers' housing costs : 6.6%
Furniture and household goods : -0.9%
Health : 6.8%
Transport : -0.1%
Communication : 4.1%
Recreation and culture : 4.6%
Education : 4.5%
Restaurants and hotels : 6.1%
Miscellaneous goods and services : 3.4%
All goods : -0.8%
All services : 6.0%

In short, most prices for services are still rising, but the average rise is significantly less than a year ago. The problem for the Prime Minister is that most people are not yet feeling this and the Bank of England has resisted calls to reduce the base rate. This latter point helps to explain the 6.6%% inflation rate for housing costs.

Observations

People’s sentiment about many things is determined in part by what they see and hear on the mainstream media. It takes some time before people’s real life experiences translate into a realisation that things might actually be better.

Overall, average CPI in April was -0.8% for goods. In other words, prices actually fell. The reason the CPI is now at 2.3% is because of the increase in prices for services, at 6%.

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[ Sources: Office for National Statistics | EU Commission ] Politicians and journalists can contact us for details, as ever.

Brexit Facts4EU.Org, Fri 24 May 2024

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Reader Comments 7

1. Sparky , Friday, May 24, 2024, 06:08:

The 2.3% was not as low as expected and one month is not enough. The BoE said that In April, services inflation was still 5.9% and makes a June cut in interest rates unlikely.
.
Relying on Interest rates to curb inflation is not as effective as it has been historically due to the increase in the size of an older generation that own their own homes and the a higher number of people renting.
.
Sadly it won't be enough for Rishi, his party carries too much baggage following Boris, Truss and Brexit. People feel and are less well off for the first parliamentary term since the 50's (Sky News reasons for the election being called). Labour will be gifted the GE win.

2. LuxuryBalloon , Friday, May 24, 2024, 06:57:

Not only is our inflation significantly below that of the Eurozone (2.3% vs 2.4%), our interest rates are also significantly higher … which is great news for savers. I would not wanna be a saver in the EU!

3. NH , Friday, May 24, 2024, 09:26:

2. LB, "I would not wanna be a saver in the EU!"
Which part of the Eurozone ?
In some nations inflation is almost zero so savers do extremely well, in others inflation exceeds the interest rate so savers lose money. That's the problem with the Eurozone !
.
1. Sparky, "higher number of people renting."
Are you trying to tell everybody that rents are not effected by mortgage rates. It may be best to speak people in the renting market rather than make up your own "facts".
.
1. Sparky, "the size of an older generation that own their own homes"
Are you trying to tell everybody that spending by older home owners has suddenly become a major part of the UK economy. Maybe you should be giving your advice to the Bank of England, it should give them a good laugh !

4. Gazzablack , Friday, May 24, 2024, 11:43:

Re 1 and inflation figure
.
And bang on cue, here comes sparky to put a negative spin on positive news
.
Well sparky my little fruitloop, that inflation figure is lower than in both the USA and EU, and it's not an outlier, it's a trend.
.
Meanwhile
A further fall of 7% in the UK energy price cap at the start of July will mean that cumulative price inflation in household energy since 2020 will (probably) be lower than the Eurozone in the second part of the year.
The 7% reduction in the price cap will save the average consumer £122 per year
And that will add extra impetus to the trend.

5. Sparky , Friday, May 24, 2024, 12:20:

You guys do make me chuckle. Thanks guys.
.
NH. From 1960 to 2020 UK population has increased roughly 16 million. We have roughly 6 million more people over 65. Partly why we have a housing issue and pressure on health services. Over 65’s tend to spend less but unlikely to have a mortgage effected by interest rates. Of course rents will be effected by interest rates but not directly, supply and demand will have more impact.
.
G Listening to Martin Lewis he says this will be the last drop in the cap and he expects it to go up later this year. I think we’re seeing why Rishi has called for a GE.
,
Looking forward to next chuckle.

6. NH , Friday, May 24, 2024, 14:25:

5. Sparky, "From 1960 to 2020 UK population has increased roughly 16 million"
So you are having to go back 60 years to try and justify your barmy claim that the Bank of England is incorrect to believe that using interest rates to curb inflation is not effective. Recent UK Inflation did not take off until 2021 so are you claiming the UK population has aged significantly since then. Prior to 2021 we had a long period of ultra low interest rates because deflation was the major concern. The increase in older homeowners were clearly not creating inflation during this period.
.
The Bank of England, The USA Federal Reserve, the European Central Bank and just about everybody else is using interest rates as their primary tool to control inflation. Maybe you want to have a delusional chuckle at all of them, obviously in your strange mind you are superior to the rest of the world. Why don't you suggest an alternative means of controlling inflation ?

7. David , Friday, May 24, 2024, 14:45:

Reply to Sparky re comment 5.
The reason we have a housing shortage is because of unprecedented mass immigration over the past
20 odd years, combined with not enough houses being built.
Estimated UK population in 1960 (Estimated as census was taken following year in 1961) - 52.5 million
Census data for 2001 - 58,789,194.
So, an increase of just over 6 million in 40 years which works out as an average annual increase
of 150 thousand a year..
Current UK population is estimated at just under 68 million.
So an increase of 9 million from 2001 in 23 years which works out as an average annual increase of 391 thousand a year.
The rate of increase is more than double what it was from 1960 to 2001.
This increase in population is due mostly to immigration as the UK's fertility rate has been below 2 per couple
since 1965.

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