Weaker economy keeps inflation rise in check

The Consumer Price Index (CPI) fell to three per cent in April, compared with 3.5 per cent in March, its lowest level since February 2010, the Office for National Statistics (ONS) said.

The weak economic climate is putting pressure on retailers, holding clothing and footwear prices rises to 0.2 per cent, compared with 1.4 per cent last year.

And lower excise duty rises on alcohol and tobacco, as well as lower air fares due to the timing of Easter, also helped keep a lid on the rising cost of living.

Bank of England Governor Sir Mervyn King narrowly avoided sending his 10th “Dear Chancellor” letter to explain why inflation is higher than the Government’s two per cent target, as at three per cent it is now within one percentage point of that goal.

Inflation has fallen from 5.6 per cent last September due to the waning impact of the VAT rise at the start of 2011, falling energy, food and commodity prices and a bill cuts from utility providers.

However, increasing tensions between the West and Iran pushed oil prices higher in March which increased inflation.

The sharp decrease in April is likely to bolster the case for the Bank to pump more emergency cash into the economy through its quantitative easing programme.

The Retail Price Index fell to 3.5 per cent from 3.6 per cent.