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Inflation falls for first time since September

18 May 2016

The UK's inflation rate fell to 0.3% in April, down from 0.5% in March, according to the Office for National Statistics (ONS).

From late 2015, the Consumer Prices Index (CPI) rate began to increase gradually from close to zero, and the drop last month is the first fall since September 2015.

The ONS attributed the drop to falls in air fares following the early Easter holiday, along with falls in the prices of clothing, vehicles and social housing rent.

These downward pressures were partially offset by rising prices for motor fuels, certain recreational goods and cultural services, and by food prices, which were unchanged between March and April 2016.

With inflation remaining low, the Bank of England's Monetary Policy Committee (MPC) is not expected to raise interest rates until at least next year.

Martin Beck, senior economic advisor to the EY Item Club, said: ‘We are likely to see inflation remain close to current rates until the latter part of the year, when the base effects associated with last winter's collapse in the oil price will begin to kick in and finally drag the CPI measure above 1%.

‘Such a benign outlook is likely to stay the MPC's hand until well into next year.’

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