Inflation may have risen to 1.8% but we're probably still getting richer

Price increases look to have outstripped wage rises again, however it's likely to be temporary. Blame Easter.

by Rachel Savage
Last Updated: 20 May 2014

Just when we thought economic growth might finally be putting cash back in our pockets, some statistics have reared their numerical head to make us feel a bit poorer again. Inflation rose to 1.8% in April from 1.6% in March, taking price hikes above the 1.7% year-on-year rise in wages in the three months to February that made us so gleeful just last month.

However, despite the Consumer Prices Index climbing for the first time in 10 months, the boa constrictor of falling purchasing power may not be encircling us again just yet. The reason, dear reader, is those shifty Easter holidays.

Transport whacked up inflation 0.4% all by itself, as travel companies increased air fares 18% and ferry tickets 22% in April, while petrol also rose, the Office for National Statistics said. That cancelled out a 0.5% fall in the price of food, brought on by supermarkets’ increasingly bloody price wars.

Moreover, inflation may have risen, but it’s still below the Bank of England’s 2% target rate. Governor Mark Carney said last week he expects it to stay under that for the next two years. The pressure to raise interest rates (for example, if inflation needed subduing) is off - for now.

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