First increase in inflation for ten months confirmed

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Inflation rose for the first time in 10 months in April, stalling hopes for a pick-up in real terms wages.

The Consumer Prices Index (CPI) measure of inflation ticked up to 1.8 per cent after hitting a four-year low of 1.6 per cent the month before, the Office for National Statistics (ONS) said.

Latest figures show annual wage increases were stuck at 1.7 per cent meaning a hoped-for sustained period of pay rising faster than the cost of living has yet to materialise.

Yesterday’s widely-expected inflation figure still means it has been at or below the Bank of England’s two per cent target for five months in succession – with the rate expected to remain low for some time. But it ends a period over 
which CPI fell for six straight months.

The apparent hiccup in the trend of falling inflation comes after the previous month’s figure was hailed as “welcome news for families” by Chancellor George Osborne.

Earnings have not consistently been improving at a higher rate than the cost of living since 2008 but appear to have caught up in recent months.

A hoped-for acceleration in real-term wages would provide a boost for the coalition amid Labour claims that the recovery has yet to improve the lives of ordinary voters. But the new figures suggest that this remains stuck in the starting blocks.

CPI was driven higher by air and sea fares due to the timing of Easter, which fell in April this year, as well as petrol prices which were flat compared to a 2.1p per litre month-on-month fall in 2013.

A recovery in retail prices and sales for women’s clothing and accessories also had an upward impact on inflation.

Food and non-alcoholic 
beverages fell by 0.5 per cent month-on-month although there was no indication as to whether this was a result of the much-heralded supermarket price war.

Within this, vegetables fell 2.3 per cent between March and April because of a better growing season, while the price of fish dropped 3.4 per cent.

A separate measure of inflation, the Retail Prices Index (RPI), which includes housing costs, was unchanged at 2.5 per cent.

CPIH, a new measure which also includes housing costs, rose to 1.6 per cent, up from 1.5 per cent in March.