UK Inflation Fastest Since 2013

Squeezing household spending, UK inflation accelerated to the highest level since 2013 largely due to higher air fares and oil prices in April.

Inflation rose more-than-expected to 2.7 percent in April from 2.3 percent in March, data from the Office for National Statistics showed Tuesday.

This was the highest since September 2013 and above the expected 2.4 percent.

Core inflation that excludes energy, food, alcoholic beverages and tobacco accelerated to 2.4 percent from 1.8 percent.

Air fares surged 18.6 percent in April reflecting the usual pattern of increasing prices around Easter. Prices of clothing, vehicle excise duty and electricity also contributed to higher inflation.

At the May monetary policy meeting, the Bank of England said the monetary policy could need to be tightened by a somewhat greater extent over the forecast period if the economy expands as estimated.

The bank had raised its inflation forecast for 2017 to 2.7 percent from 2.4 percent.

Scott Bowman, a UK economist at Capital Economics, said the policymakers will hold off until mid-2018 before hiking, as this will be the point at which the economy should be strong enough to start normalizing policy.

On a monthly basis, consumer prices gained 0.5 percent in April, faster than the expected 0.4 percent.

The consumer prices index including owner occupiers' housing costs advanced 2.6 percent annually, faster than the 2.3 percent increase in March. This was the fastest since June 2013.

Factory gate prices have grown for 15 consecutive months to April despite raw material costs being relatively flat since January 2017, the ONS said in a separate communique.

Month-on-month, output price inflation held steady at 0.4 percent. Monthly inflation was forecast to halve to 0.2 percent.

Likewise, the annual growth in factory gate prices remained at 3.6 percent in April, while economists had expected the rate to ease to 3.4 percent.

Input price inflation moderated more-than-expected to 16.6 percent from 17.4 percent in March. Prices were expected to gain 17 percent.

On a monthly basis, input prices edged up 0.1 percent after staying flat in March. Prices were forecast to remain unchanged in April.

Another report from the ONS showed that house price growth continued the general slowdown seen since mid-2016. House prices climbed 4.1 percent year-on-year, slower than the 5.6 percent increase in February.