LONDON – Inflation levels in the UK fell more sharply in March than expected, as the price pressure caused by Brexit votes for the British eased.
The National Statistics Bureau said Wednesday that the UK's CPI inflation rate, the most important measure of inflation, stood at 2.5% in February, down from 2.7% in February and lower than its forecast economists.
The CPI measures the weighted average of the prices of a basket of goods and services such as food, transport and medical care.
CPIH, a measure that involves home-maintenance costs – which the ONS calls a more useful indicator of the cost of living than CPI – was 2.3% after 2.5% last month.
"Inflation has dropped to its lowest level in a year, and apparel prices have risen more slowly than usual this season," ONS Inflation Director Mike Hardie said in a statement.
"Alcohol and tobacco also helped reduce inflationary pressures as the tobacco tax increases related to the budget did not appear this March due to the new autumn settlement."
Prior to voting to leave the EU in June 201
Most forecasters, including the Bank of England, had expected inflation to fall sharply in 2018. These forecasts become more concrete.
Wednesday's inflation data is only 24 hours after the ONS revealed that UK wages had risen 2.8% in the last data period. Together with the inflation rate, this figure means that wages in the United Kingdom are actually rising for the first time since early 2017.
The pound rebounded sharply in April, reaching an earlier Brexit high month, but fell sharply after Wednesday's inflation figures. The pound fell 0.5% against the dollar to trade at $ 1.4210, as the graph below shows:
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