Inflation shock sends borrowing costs surging towards Truss-era … – The Telegraph

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UK borrowing costs surged to levels last reached under Liz Truss's ill-fated premiership after traders were spooked by unexpectedly strong inflation.
The consumer prices index (CPI) dropped to 8.7pc last month from 10.1pc in March, but the Bank of England had expected a bigger fall to 8.4pc.
Meanwhile, core inflation increased to 6.8pc in April, its highest level since 1992.
Traders now expect interest rates to rise to 5.5pc by the end of the year, up from 4.5pc currently.
Core inflation strips out more volatile elements such as rises in food and drink prices, which stayed near 45-year highs at 19pc.
The data published by the Office for National Statistics (ONS) piles pressure on the Bank of England to raise rates as it signals inflation will remain higher for longer.
It comes a day after the International Monetary Fund warned that the Bank was not finished with taming inflation as it said Britain faced two more years of soaring prices.
The ONS said the cost of rice, flour, pasta, eggs and fruit climbed faster on an annual basis than in March. Bananas, boxed chocolates and vegetables were among other items that drove up inflation last month.
Traders are now certain Threadneedle Street will raise interest rates at the Bank's next three meetings in June, August and September.
Investors are also betting there is about a 50pc chance of a final rise in November.
Yields on two-year Government gilts, which are most sensitive to interest rates, surged by 27 points to 4.38pc after the inflation data was published.Yields on 10-year UK debt hit 4.35pc at one point, levels not scene since seen last October in the wake of Ms Truss’s disastrous mini-budget.
The upside surprise in inflation also prompted a string of City analysts to tear up their interest rate forecasts.
Bank of America, Nomura, BNP Paribas and Citi are among the investment banks to change their predictions yesterday, with Nomura now forecasting three more rate hikes.
Allan Monks, chief UK economist at JP Morgan, said: "There appears to be a concerning interaction between wages and prices – an upside risk in the Bank’s forecasts – and it should try to get ahead of this with clearer signs in the data that this risk is now crystallising.
"It is important to move quickly given the muted speed of transmission from higher rates into the mortgage market."
Mr Monks said there was "a good case for the Bank to consider a 50bp [increase] in June".
Four more rate rises of 0.25 percentage points would take the Bank rate from 4.5pc to 5.5pc, the highest since 2007. As recently as a month ago, investors were predicting rates would peak at 4.5pc.
Higher rates will deal a blow to families. Mortgage holders will see their monthly payments jump to up to 30pc of their income from about 20pc over the past few decades, the chief executive of Barclays warned on Wednesday.
CS Venkatakrishnan said the sharp rise in interest rates would lead to a "huge income shock" by the end of next year.
A jump in benefits payments could also prolong the inflation crisis as couples are handed as much as £168 more per month to spend.
The 10.1pc inflation-linked increase in benefits payments in April, which exceeded wage growth, will help shops to keep prices higher for longer, economists warned.
Douglas McWilliams, deputy chairman of the Centre for Economics and Business Research, said: “The more people are spending money, the less pressure there is on people like supermarkets to reduce prices.”
It came as Janet Yellen also warned of “substantial financial market stress” as the political deadlock over raising of the US debt ceiling continues.
The US Treasury Secretary reiterated her caution that the country could run out of cash as soon as June 1 without a deal.
Ms Yellen told the Wall Street Journal CEO Council summit: “It’s highly likely that we would run out of resources to meet all the government’s obligations in early June and possibly as early as June 1.”
Talks between Republican lawmakers and the White House on raising the debt ceiling continue to drag on.
Read the latest updates below.
Microsoft has formally filed its appeal against the UK's competition watchdog after the regulator's decision to block its $69bn Activision Blizzard purchase.
Microsoft lodged its paperwork at the Competition Appeal Tribunal, Bloomberg reported.
The EU waved the deal through, but the CMA stuck by its decision saying the merger would allow Microsoft too much control of key parts of the gaming market. 
Cevian Capital, an activist investor, has sold close to its entire stake in Aviva three years after hoovering up shares in the insurance firm.
The hedge fund has sold off its stake in Aviva from a holding of 6.5pc, or 150 million shares, at its peak last October.
It first began buying the shares in 2020, demanding better returns for shareholders.
The bet paid off as the company said this year it would buy back £300m of shares, increase its dividend and pay more in dividend return in the future.
The Czech Republic will buy 246 CV90 fighting vehicles from BAE Systems' Swedish business, Hägglunds.
About 40pc of the work will go to factories in the Czech republic, the company said.
“The Czech Republic and its Army will benefit from this combat-proven infantry fighting vehicle with a leading combination of mobility, firepower, protection, and future growth potential,” said Tommy Gustafsson-Rask, managing director of BAE Systems Hägglunds, in Örnsköldsvik, Sweden. “This contract also represents a significant win for Czech industry that will last for decades.”
Slovakia recently selected the CV90 for its armed forces, joining the Czech Republic as the eighth and ninth buyers of the vehicle.
A worldwide rout for financial markets has carried over to Wall Street as the US government creeps closer to a possibly disastrous default on its debt.
The broad-based S&P 500 has dropped 1.9pc, while the Nasdaq Composite was down 1pc and the Dow Jones Industrial Average has fallen 0.6pc so far.
The FTSE 100 has plummeted 1.8pc while markets have fallen 2.1pc in Frankfurt and 1.6pc in Hong Kong.
Republican House Speaker Kevin McCarthy told reporters that he and Joe Biden have not spoken since a Monday meeting at the White House but that talks between their negotiating teams have been "productive".
Mr McCarthy added: "We'll get together this morning." He is due to hold a press conference at 4.45pm UK time.
That's all from me for today. My esteemed colleague Howard Mustoe will guide you through events into the evening.
Janet Yellen warned there will likely be substantial market stress if the deadlock continues over the raising of the US debt limit
The US Treasury Secretary reiterated her concern that the US will run of cash as soon as June 1, adding it was hard to be precise about exactly which day the US government will run out of resources. 
She told the Wall Street Journal CEO Council summit that there would be some obligations the US would be unable to pay without the debt limit being raised from $31.4trn, adding the Treasury and President Joe Biden "will face very tough choices" unless a deal is made.
Negotiators were tentatively planning to return to the table amid the stalemate. House Speaker Kevin McCarthy said he had spoken to White House negotiators and that discussions would continue.
Ms Yellen said: "Even in the run up to an agreement there can be substantial financial market stress.
"If you go back to 2011, US Treasuries were downgraded. The stock market fell 20pc."
She also pointed out that the US paid $20bn in interest payments during that year in spite the debt ceiling being raised at 11th hour. 
She added: "We want to avoid that. We are just starting to see some pressures emerging in financial markets."
Chinese lottery ticket sales have hit their highest in a decade as young people try to drag themselves out of the gloom amid surging youth unemployment. 
Nationwide lottery sales jumped 62pc on the year to 50.3bn yuan (£5.8bn) in April while the first four months brought in 175.15bn yuan, up 49.3pc on the year, finance ministry data showed. 
Figures for the same month from the National Bureau of Statistics showed one in five of China’s young adults are now unemployed. 
The jobless rate among 18 to 24-year-olds reached 20.4pc in April, climbing from 19.6pc in March. 
Yi Xianrong, an economist at Qingdao University, said: 
People, especially young people, hope to strike it super rich overnight with a little money. 
This is related to the economy, as many young people don't have anything to do and they go to lottery shops.
The boss of Jaguar Land Rover-owner Tata is expected to fly to London next week to announce that Britain has won a battle with Europe to host its electric car battery plant.
Tata's chairman Ratan Tata is scheduled to meet Rishi Sunak to finalise the deal to build a factory which will create up to 9,000 jobs, the BBC reported.
The company had been considering another site in Spain.
The expected decision to choose the Bridgwater site in Somerset will comes amid growing pressure to secure the supply chain for electric cars in Britain.
Stellantis – which makes Vauxhall, Peugeot, Citroen and Fiat – had warned it could be forced to close factories unless the Government alters post-Brexit rules that will force it to source more than 45pc of materials for electric cars within the EU next year, or face 10pc tariffs.
Wall Street's main indexes opened lower as yet another round of talks between the White House and Republican representatives over raising the debt ceiling failed to make a breakthrough, keeping investors on edge.
The Dow Jones Industrial Average fell 33.75 points, or 0.1pc, at the open to 33,021.76.
The S&P 500 opened lower by 12.62 points, or 0.3pc, at 4,132.96, while the Nasdaq Composite dropped 78.35 points, or 0.6pc, to 12,481.90 at the opening bell.
Meta expects to cut around 490 jobs at its international headquarters in Dublin, or almost 20pc of its Irish workforce, as part of 10,000 global layoffs announced in March.
The Facebook owner said the losses include finance, sales, marketing, analytics, operations, and engineering.
Meta laid off 320 Irish employees in November in an initial round of global cuts and the final number of redundancies in this round will be subject to collective consultation.
It has 2,500 full-time employees in Dublin.
Bernard Arnault, the world's richest person, had $11.2bn (£9bn) wiped from his fortune in one day over concerns that a softening US economy will dampen demand for luxury goods. 
The founder of LVMH — whose offerings include Louis Vuitton handbags, Moet & Chandon Champagne and Christian Dior gowns — had seen his wealth balloon for most of 2023 as share prices of European luxury companies surged.
On Tuesday, he gave back some of those gains. LVMH shares fell 5pc in Paris — the most in more than a year — amid a broader decline that erased about $30bn from the European luxury sector. Shares have fallen a further 1.9pc today.
Even with the selloff, the French billionaire still has a net worth of $191.6bn, according to the Bloomberg Billionaires Index. He has added $29.5bn so far this year. 
The gap between the fortunes of Mr Arnault and Tesla’s Elon Musk, the world's second-richest person, has shrunk to just $11.4bn. 
Riders for Deliveroo protested against "deteriorating" working conditions and low pay as the takeaway delivery giant's shareholders met in London.
Outside the company's annual general meeting (AGM) at 100 Bishopsgate in London, riders also raised frustrations with the bumper pay package of founder and chief executive Will Shu.
Demonstrators outside the venue held banners reading "Shame on Shu" and chanted: "Deliveroo, you're no good, pay your riders like you should."
It comes amid long-running concerns from delivery riders over their pay levels and worries related to their "independent worker" status.
Joe Durbidge, 31, who has worked for Deliveroo for four and a half years, said he has worked 50-hour weeks and been paid around as little as £2.90 per delivery.
"Conditions are deteriorating constantly but my fees have never gone up since I started," he said.
"Nobody's satisfied with the job. It's crazy."
US markets are poised to follow global stock markets lower early Wednesday as the US government crept closer to a catastrophic debt default.
The S&P 500 and Nasdaq 100 are expected to fall 0.4pc after the opening bell and the Dow Jones Industrial Average is on track to decline 0.3pc. 
The longstanding Washington debate over the size and scope of the federal government now has just days to be resolved, with the Treasury Department saying the government risks running out of cash to pay its bills next week. 
Negotiators are expected to convene today for another round of talks as frustration mounts.
The political standoff is tipping the country closer to a crisis, roiling financial markets and threatening the global economy. 
Failure to raise the nation's debt ceiling, now at $31.4trn, would risk a potentially chaotic federal default, almost certain to inflict economic turmoil at home and abroad.
The pound has reversed earlier gains against the dollar despite markets interest rates to head toward 5.5pc by the end of the year.
Sterling has dropped 0.2pc below $1.24 as traders dump riskier assets like stocks in favour of safe havens like the dollar.
It comes as markets remains spooked at the prospect of a US debt default, with talks still not yielding a deal on raising the limit on borrowing for the world's largest economy above $31.4trn.
Five of the world's biggest banks have been accused of ripping off UK taxpayers after sharing sensitive information when trading government bonds.
Banking & financial services correspondent Simon Foy has the details:
The Competition and Markets Authority (CMA) said it provisionally found that traders at Citigroup, Deutsche Bank, HSBC, Morgan Stanley and RBC colluded in chatrooms to swap sensitive information about UK bonds in the wake of the financial crisis.
The regulator said the case relates to a small number of traders who were involved in the buying and selling of UK government bonds at the banks and who used one-to-one Bloomberg chat rooms to unlawfully share information on pricing and strategies. 
Michael Grenfell, head of enforcement at the CMA, said: "Our provisional decision has found that, in the aftermath of the global financial crisis, five global banks broke competition law by taking part in a series of one-to-one online exchanges of competitively sensitive information on pricing and other aspects of their trading strategies on UK bonds.
"This could have denied taxpayers, pension savers and financial institutions the benefits of full competition for these products, including the minimisation of borrowing costs."
Read how the alleged sharing of the information took place.
Marks & Spencer is to roll out a further 800 self-service checkouts across its clothing, homeware and food stores as part of a cost-cutting drive to tackle inflation.
Retail editor Hannah Boland has the latest:
The retailer said the addition of more unmanned till points, which are similar to those in supermarkets for groceries but can be used to pay for clothes, will help make its shops more efficient and contribute to its target of achieving £150m in cost savings this year.
M&S is grappling to offset an additional £50m in energy costs and a £100m increase in staff pay this year.
At some stores, around 70pc of food purchases take place either on self-service checkouts or through the retailer's Scan and Shop mobile phone app.
The latest targets are part of wider efforts to cut costs by more than £400m over the next five years as profits took a hit this year.
Bank of England Governor Andrew Bailey has said firms should seek to reduce their emissions by collaborating with their more polluting suppliers rather than getting rid of them.
Speaking at the Net Zero Delivery Summit, Mr Bailey said: 
We really do all have an important role to play and let me offer one path towards the solution – one that also helps us, I think, to identify and unlock opportunities in the economy.
A firm could seek to reduce its emissions by disengaging from emission intensive suppliers. But of course that doesn't necessarily help to remove emissions from the economy. So that the other the preferable solution is engagement and collaboration.
Yes, delivering net zero will happen through individual actions. But we can accelerate progress by working collaboratively. So engaging with counterparties, suppliers and customers to build an understanding of the actions needed to transform their businesses from where they are today to align to a net zero world and access the funding needed to do it is important.
Chancellor Jeremy Hunt appeared to rule out tax cuts in the near future, as he stressed the need to focus on reducing inflation.
He was asked specifically if tax cuts were off the table in an interview at the Wall Street Journal CEO Council summit. He said:
What is a tax cut? A tax cut is putting money in people's pockets so they can spend more.
The biggest way that I can put money in people's pockets so they have more to spend is to halve inflation because that is eroding 10pc of the value of people's pay packets or has been over the last year. 
So right now to reflate the economy with further stimulation, would mean that monetary policy and fiscal policy were pointing in opposite directions.
That would be the wrong thing to do.
If we want to cut taxes in the long run as all conservatives want to do, because I believe in a low-tax economy, number one task is to get inflation down.
Average house prices fell for the fourth month in a row in March, meaning the average UK home is now worth £7,500 less than in November.
Economic reporter Melissa Lawford has the latest:
Sales prices dropped by 1.2pc between February and March, bringing the average UK house price down to £285,009, according to the Office for National Statistics' non-seasonally adjusted estimate.
This means house prices have fallen by 2.6pc since their November peak, as big increases in mortgage rates take their toll on buyer demand.
On an annual basis, house price growth in March was 4.1pc, down from 5.8pc in February. 
UK rent growth hit a new record high for the 12th month in a row in April, with prices soaring by 4.8pc, driven by an extreme imbalance between supply and demand.
London and Yorkshire & the Humber saw the largest year-on-year increases at 5pc, according to data from the Office for National Statistics.
The ONS measures rent growth across the whole market, rather than only on newly let properties.
The Chancellor has insisted a car battery crisis can be resolved without reopening the Brexit deal, despite the owner of Vauxhall warning that failing to do so could force it to close British factories.
Jeremy Hunt said the Windsor Framework agreed in February between the UK and the EU meant there was "trust on both sides".
He insisted the Government would "talk proactively" with car manufacturers and the EU but said: "We are not talking about changing the deal."
"We are talking about making it work to mutual advantage," he told the audience at the Wall Street Journal CEO Council summit.
Stellantis – which makes Vauxhall, Peugeot, Citroen and Fiat – said present arrangements with the EU pose a "threat to our export business and the sustainability of our UK manufacturing operations".
So-called local content rules state that from next year, 45pc of the value of the electric car should originate in the UK or EU to qualify for trade without tariffs, which would be set at 10pc.
The company warned: "If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close."
Jeremy Hunt said that the Government's target to halve inflation is "still absolutely deliverable".
Speaking to the Wall Street Journal CEO Council summit, he was asked about the latest ONS figures for inflation.
The Chancellor referenced the International Monetary Fund (IMF) verdict that the pledge to halve inflation was "non-trivial, but it is achievable".
He praised the Prime Minister's focus on inflation and said halving it was "not automatic and we have to make it a total priority".
Telling the event that there was "no room for complacency", he said: "It is still absolutely deliverable, but we have to stick to the plan."
"We have to strain every sinew to make sure we deliver it."
Jeremy Hunt will be appearing at the Wall Street Journal CEO Summit shortly.
He just had time before taking to the stage to send out this thread of tweets saying things are "tough" but will "get better". He said:
Today's fall in inflation to 8.7pc – the lowest rate in over a year – shows we're on the right track, but there is no room for complacency..
The IMF said yesterday we have acted decisively to tame inflation, but there is still work to be done – especially on food prices. Working in lockstep with the Bank of England, the UK Government has a clear plan to halve inflation this year. We must stick resolutely to the plan.
In the meantime, we're supporting families with the cost of living worth £3,300 over this year and last.
Tomorrow, Ofgem will set the new Energy Price Cap where falls in gas prices will feed through to bills from July.
It's tough right now, but things will get better.
Today’s fall in inflation to 8.7% – the lowest rate in over a year – shows we're on the right track, but there is no room for complacency.

The IMF said yesterday we have acted decisively to tame inflation, but there is still work to be done – especially on food prices.

European natural gas prices declined further to the lowest level in nearly two years as the outlook for demand remains bleak. 
Benchmark futures fell as much as 2.1pc to below €29 per megawatt hour after earlier gains – providing further relief for households amid soaring inflation across the continent. 
Weak industrial demand and fuller-than-usual gas storage facilities have weighed on prices for several consecutive weeks, raising questions over how much lower they can drop before producers re-evaluate supply needs.  
Europe is heading into the warmest months of the year with inventories about 66pc full — well above the historical average —  indicating that it has turned the page on the worst of the energy crisis. 
A union leader has warned there is no end in sight to the cost-of-living crisis despite the fall in inflation.
Unions pointed out that RPI inflation remained in double figures despite falling to 11.4pc in April from 13.5pc in March.
Rising prices have played a key part in the wave of strikes which continue to be held in many sectors of the economy as workers see their pay fall further behind inflation.
Unite general secretary Sharon Graham said: 
Falling inflation does not mean we've reached a turning point where things can only get better.
In the real world there's no end in sight to the cost-of-living crisis.
The cost of food is now reaching record highs – driven of course by rampant profiteering by the supermarkets, in particular.
Until profiteering is challenged there can be no respite from continuing inflation.
Sir Richard Branson's Virgin Orbit has announced they are selling their assets and will cease operations months after a mission failure in the UK.
In a statement, the "responsive space launch provider" said: "(Our) legacy in the space industry will forever be remembered. 
"Its ground-breaking technologies, relentless pursuit of excellence, and unwavering commitment to advancing the frontiers of air launch have left an indelible mark on the industry."
The California-based company will sell its assets to four winning bidders.
Virgin Orbit said in March they would cut 85pc of their workforce after failing to secure new investment. It filed for Chapter 11 bankruptcy protection in the US in April.
Founded in 2017, the company developed rockets to carry satellites but the group, which was listed in New York in 2021, has struggled for profitability and been weighed down by its significant debt pile.
In January, the group had sought to complete the first satellite launch from UK soil, with hopes the mission would be a major stepping stone for space exploration from the UK.
The firm's LauncherOne rocket failed to reach orbit and saw its payload of US and UK intelligence satellites dive into the ocean.
The drop in prices rises in April to 8.7pc still leaves Britain with the highest inflation among countries in the G7, featuring also Canada, France, Germany, Italy, Japan and the United States.
As core inflation reached its highest level since 1992, National Institute of Economic and Social Research associate economist Paula Bejarano Carbo said:
This fall was largely driven by falls in electricity and gas prices on the year (i.e. last April's energy rise 'dropping out'), though was partially offset by significant increases in food prices, which saw an inflation rate of 19pc in April – just 1 percentage point below last month's 45-year high. 
Concerningly, core CPI rose to a series high of 6.8pc in April from 6.2pc in March. 
Overall, the data indicate that, despite a welcome fall in headline CPI, we have yet to see a turning point in underlying inflationary pressures in the UK as food prices in particular continue to soar; this is especially worrying as lower-income households are disproportionally hit by elevated food inflation.
Ofcom has said it will not prevent BT from rolling out a new pricing plan for its full-fibre broadband after finding the proposals were not anti-competitive.
BT's network arm, Openreach, which runs the UK's only national broadband network, had put forward plans for a pricing deal that would give lower prices to retail providers, such as Sky, TalkTalk and Vodafone.
But this was only if they agreed to use mainly Openreach's full-fibre products for new orders instead of its legacy copper products.
The plans had been criticised by BT's competitors, however telecoms regulator Ofcom said it does not believe Openreach's "new pricing discounts to be anti-competitive" or require further investigation.
The UK's main stock indexes have fallen as a closely watched measure of core prices surged to a 31-year high in April, cementing bets of further interest rate increases by the Bank of England.
The export-focussed FTSE 100 and the midcap FTSE 250 have both fallen 1.2pc, having also been hit by wider concerns on global markets about the potential for the US to default as talks drag on over whether to raise its $31.4trn debt ceiling.
The pound climbed 0.2pc after data showed April consumer inflation (CPI) eased to 8.7pc, however, it has since fallen back to be flat as core inflation, which excludes energy, food and tobacco prices, hit its highest rate since March 1992.
On the markets, Marks & Spencer Group has added 6.9pc as the retailer forecast a modest annual revenue growth and said it would resume its dividend with an interim payout in November.
Ocado Group slid 1.8pc after it was marked to be removed from the FTSE 100 index and added to the FTSE 250 index.
Traders have ramped up bets on the Bank of England raising interest rates, with the peak now expected at 5.5pc.
The markets are pricing in much steeper rises in rates after the Office for National Statistics revealed core inflation in the UK rose to 6.8pc in April – its highest level since 1992.
Core inflation strips out volatile food and drink prices, which were close to 45-year highs at 19.1pc last month.
Markets indicate that traders are certain the Bank of England will raise interest rates at its next two meetings in June and August.
Traders also bet there is an 88pc chance of another 0.25 percentage point increase in September, and about a 46.4pc chance of a final rise in November.
Markets in London have taken a fall even as inflation fell below double digits for the first time since August last year.
The FTSE 100 dropped 1pc to 7,685.36 while the midcap FTSE 250 tumbled 1.2pc to 19,028.21 as the US government crept closer to a potentially disruptive default on its debt.
The latest data showing food prices remain near 45-year highs comes after food manufacturers were called to a meeting with the Chancellor on Tuesday to explain why shoppers are still facing eye-watering prices at the tills.
Economics editor Szu Ping Chan has the details:
They rejected claims that they were keeping prices high, telling Jeremy Hunt that they were absorbing the majority of cost increases and not passing them on to supermarkets.
Tesco, Morrisions and Aldi are among the supermarkets that have cut the price of some own-brand essentials in recent weeks, which should help to ease the pace of price rises ahead.
There were also signs that underlying inflation could be more stubborn than expected, piling pressure on the Bank of England to keep interest rates higher for longer.
The pound spiked 0.2pc against the dollar as investors after the figures showed core inflation, which strips out food and energy prices, rose by 6.8pc in the year to April, up on March's rise of 6.2pc and at its highest level since March 1992.
The International Monetary Fund (IMF) warned this week that the Bank may need to raise rates again from their current 4.5pc level in order to keep a lid on price rises. Both the Bank and IMF believe inflation will not fall back to the Bank's 2pc target until 2025.
Briefly looking away from inflation, Marks & Spencer has revealed a dip in profits for the past year as higher costs offset jumps in sales for its food and clothing businesses.
The high street chain posted a profit before tax and adjusting items of £482m for the year to April 1, down from £522.9m last year.
The retailer said the figure, which was above analyst predictions, was also lower due to the loss of pandemic-era business rates relief from the government.
M&S also told shareholders it has witnessed a "good start" to the new financial year, despite an "uncertain" outlook for consumer spending.
Liberal Democrat Treasury spokeswoman Sarah Olney said the latest inflation figures were not a cause for celebration. She said:
Inflation is soaring and food prices are still at eye-watering levels. People are worried that there is no end in sight for the cost-of-living crisis.
It is shocking that the Chancellor refuses to act on food bills. These latest figures show the cost of shopping is through the roof, leaving families and pensioners to struggle on without any help.
Conservative ministers have shown to be completely out of touch with the cost of food crisis. Enough is enough, we need action now.
That means immediately expanding free school meals, giving farmers more support with their energy bills and cracking down on profiteering by big supermarkets and food multinationals.
It is fair to say the reaction to inflation falling below 10pc for the first time in eight months has been a sober one.
Colin Dyer, client director at abrdn said: 
While the rate itself might be slowly starting to make its way in a direction towards the Government's target, we are a long way from being on track. 
Most of us are unlikely to feel the impact of this dip immediately, and with grocery bills almost 20pc higher than last year, there is still a bumpy road ahead.
Economist Julian Jessop points out that core inflation hit a new high of 6.8pc:
So-so UK #inflation data.

Good news is that the headline CPI rate fell sharply, from 10.1% to 8.7%, but this was entirely accounted for by the fall in #energy price inflation.

Everything else looking sticky 👇

Core rate excl. food & energy hit a new high of 6.8%, up from 6.2%.
Neil Birrell, chief investment officer at Premier Miton Investors, said:
UK inflation is undoubtedly moderating, but much more slowly than expected. 
There is little good news in the CPI data released, which probably leaves the Bank of England with little choice but to keep interest rates moving higher when they next meet. 
With much of the economy remaining robust, they will probably think that it can cope with tighter monetary conditions; the problem is that when that bites, it could lead to a sharper slow down.
The pound spiked against the dollar following the announcement that the consumer prices index had fallen to 8.7pc.
Sterling has risen 0.2pc against the greenback to be worth more than $1.24.
The pound has gained 0.1pc on the euro, which is worth less than 87p.
Shadow chancellor Rachel Reeves said: 
As bills keep surging, families will be worried food prices and the cost of other essentials are still increasing.
They will be asking why this Tory government still refuses to properly tackle this cost of living crisis, and why they won't bring in a proper windfall tax on the enormous profits of oil and gas giants.
The reality is that never have people paid so much in taxes and got so little in return.
Our economy is constantly lurching from crisis to crisis, when we should be protecting family finances and building our national economic security here in Britain.
Labour's mission to secure the highest sustained growth in the G7 will make families across every part of our country better off.
ONS chief economist Grant Fitzner said:
The rate of inflation fell notably as the large energy price rises seen last year were not repeated this April, but was offset partially by increases in the cost of second-hand cars and cigarettes.
However, prices in general remain substantially higher than they were this time last year, with annual food price inflation near historic highs.
Inflation has fallen below double digits for the first time since August just a day after the IMF predicted the UK would no longer fall into recession this year.
Chancellor Jeremy Hunt said:
The IMF said yesterday we've acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast. 
So as well as helping families with around £3,000 of cost of living support this year and last, we must stick resolutely to the plan to get inflation down.
Electricity and gas prices contributed 1.42 percentage points to the fall in annual inflation in April, according to the Office for National Statistics.
However, elevated prices still contributed 1.01 percentage points to its latest reading of 8.7pc. 
Food and drink prices were still a major factor, barely falling from 19.2pc in March to 19.1pc last month.
In the year to April 2023:

▪️ the cost of raw materials rose 3.9%, down from 7.3%
▪️ the cost of goods leaving factories rose 5.4%, down from 8.5%

Inflation has fallen into single digits for the first time in eight months as the rising cost of living slows after last year's energy crisis.
The consumer prices index dropped to 8.7pc last month from 10.1pc in March, according to the Office for National Statistics.
It is the first time it has been below 10pc since August last year and leaves inflation at its lowest level since March last year.
However, economists had forecast that the annual CPI rate would drop to 8.2pc in April, moving further away from October's 41-year high of 11.1pc.
The fall, which is the largest since the Bank of England began raising interest rates to tackle the cost of living crisis in 2021, comes as last April's sky high rise in energy prices drops out of the calculation.
The energy price cap jumped higher a year ago as wholesale prices rocketed after Russia's invasion of Ukraine.
Last April, the energy price cap soared by 54pc to £1,971, but this year the Energy Price Guarantee (EPG) has been kept at £2,500 since last October.
However, food and drink price inflation remains above 19pc, falling a sliver from 19.2pc in March to 19.1pc, near its highest level in 45 years.
Core inflation, which strips out volatile food and drink prices, rose to 6.8pc in April – its highest level since 1992.
Annual inflation has continued to ease in April 2023

▪️ Consumer Prices Index, including owner occupiers’ housing costs (CPIH) rose by 7.8% in the 12 months to Apr 2023, down from 8.9% in Mar 2023

▪️ CPI rose by 8.7%, down from 10.1%

Inflation has fallen into single digits for the first time since August last year as the initial shock from rising energy prices drops out of calculations.
The consumer prices index has fallen to 8.7pc from 10.1pc in March as the impact of raising Britain's energy price cap last year in the wake of Russia's invasion of Ukraine falls out of statisticians' methodology.
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Asian stock markets slid as the US government crept closer to a potentially disruptive default on its debt.
Tokyo's main market Nikkei 225 index fell 1.1pc to 30,619.21 while the Shanghai Composite Index lost 0.5pc to 3,230.46. 
The Hang Seng in Hong Kong shed 0.9pc to 19,260.11. The Kospi in Seoul retreated 0.2pc to 2,562.60 and Sydney's S&P-ASX 200 lost 0.5pc to 7,222.60. 
New Zealand and Bangkok gained while Singapore and Jakarta declined.
Wall Street stocks finished sharply lower on Tuesday while short-term Treasury yields surged as the deadline draws closer to raise the US government's $31.4trn borrowing limit or risk default.
The S&P 500 benchmark index declined 1.1pc to end at 4,145.58 points. The Nasdaq Composite fell 1.3pc to 12,560.25 points, and the Dow Jones Industrial Average slid 0.7pc to 33,055.51 points.
Yields on one-month Treasury bonds soared to record highs at 5.888pc as crucial negotiations over the debt ceiling remained at an impasse.


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