UK Inflation Accelerated in April

Consumer prices in the U.K. rose in April at a faster pace than the Bank of England’s 2% annual goal.

The pickup adds to pressure on the central bank to nudge up interest rates, given steady growth in the economy and low unemployment. BOE officials, though, have signaled that they’re reluctant to do so while Britain’s exit from the European Union remains unresolved.

Inflation accelerated to a 2.1% annual rate in April compared with 1.9% in March, the Office for National Statistics said Wednesday. That was the first time inflation has breached the BOE’s 2% target since December.

The acceleration was fueled by rising prices for air fares, gasoline and household electricity and gas, data showed.

The U.K. was slated to leave the EU at the end of March but political gridlock means the deadline for the country’s planned departure has been pushed back to Oct. 31. The U.K. can leave sooner if warring lawmakers can ratify an exit plan after rejecting Prime Minister Theresa May’s withdrawal deal on three occasions.

Mrs. May on Tuesday made a fresh push to clear the logjam by presenting revised proposals for withdrawal that include greater protection for the environment and workers’ rights after Brexit. She also pledged to give Parliament a vote on whether to hold another referendum on leaving the EU at all.

Yet lawmakers are skeptical the revised deal that will pass when a deeply divided Parliament votes on it early June, likely triggering Mrs. May’s ouster as Prime Minister and a further spell of political uncertainty as the October deadline nears.

BOE officials believe an abrupt and messy break with the bloc would hurt the economy and lessen the need to nudge up interest rates to combat gathering inflationary pressures. Economists believe the central bank is likely to sit on its hands until the Brexit picture becomes clearer.
Source: Dow Jones