UK Inflation Rise To 1.8% Delays Real Wage Rise Hopes

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Inflation rose for the first time in 10 months in April, dashing hopes that the recovering economy could finally see wages start to rise in real terms, official figures show.

The Consumer Prices Index (CPI) measure of inflation rose to 1.8% after hitting a four-year low of 1.6% the previous month, the Office for National Statistics (ONS) said.

This means that, with annual wage rises stuck at 1.7%, inflation is still eating at pay rises for Britons. Chancellor George Osborne welcomed the sudden rise, breaking the recent trend of falling inflation, as "welcome news for families".

Jeremy Cook, chief economist at the currency company, World First, said: “This figure is slightly higher than expected, and the core reading is the highest it has been in 8 months.

“Inflation remains below target as it stands at the moment, but April’s increase has seen inflation back to outstripping wages. Mark Carney, said at the weekend that the Bank of England hopes that wages will accelerate soon, as productivity increases, and we will see a near-term lull in inflation."

A hoped-for acceleration in real-term wages would provide a boost for the Coalition amid Labour claims that the recovery has yet to improve the lives of ordinary voters, but the new figures suggest that this has yet to happen.

A separate measure of inflation, the Retail Prices Index (RPI), which includes housing costs, was unchanged at 2.5%.

CPIH, a new measure which also includes housing costs, rose to 1.6%, up from 1.5% in March. Another new measure, RPIJ, was unchanged at 1.8%.

A Treasury spokesman said: "The latest figures show that inflation remains below the target rate and well below half of the peak in September 2011.

"Lower inflation and rising job numbers show that the Government's long-term plan is working and Britain is coming back. The biggest risk to economic security would be abandoning the plan that is creating a brighter economic future."

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