UK Consumer Prices Fall in April

By Jason Douglas and Jon Sindreu 

        LONDON--Consumer prices in the U.K. fell in April compared with a year earlier for the first time in more than half a century, underscoring the weakness of inflation throughout much of the developed world.
        Britain's Office for National Statistics said Tuesday that annual inflation in the U.K. was -0.1% in April, compared with zero a month earlier. That is the first time consumer prices have fallen on an annual basis since 1960, according to ONS estimates.
        Sterling dipped to $1.5533 after the figures were released from $1.5575 earlier in the session.
        The weakness of inflation in Britain is expected to pass. Officials at the Bank of England said last week that they are doubtful the U.K. is at risk of experiencing deflation, a potentially damaging spell of sustained and widespread falls in prices that hurts consumer spending and makes it harder for governments, businesses and consumers to service their debts.
        BOE officials led by Governor Mark Carney said they expect the annual inflation rate to rise back to its 2% target by early 2017, as wage growth accelerates and oil prices recover from recent lows. The BOE signaled it remains on course to raise interest rates in the U.K. in the middle of 2016.
        The ONS said the dip in annual consumer-price inflation in April was driven primarily by airfares and other transport costs, which rose at a slower pace than they did during the same period a year earlier. Airfares vary significantly during March and April depending on the timing of Easter holidays. Weaker price-growth for clothing, alcohol and tobacco also dragged down overall inflation, the ONS said.
        The BOE isn't the only central bank grappling with weak inflation. The European Central Bank in March embarked on a program of asset purchases aimed at fueling faster economic growth and stoking inflation in the 19 nations that use the euro.
        Write to Jason Douglas at jason.douglas@wsj.com and Jon Sindreu at jon.sindreu@wsj.com
        (END) Dow Jones Newswires

        May 19, 2015 04:49 ET (08:49 GMT)

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