Britain's CPI increases by 2.8 pct year on year in April

LONDON, May 20 (Xinhua) -- Britain's consumer price index (CPI) rose by 2.8 percent year on year in April, down from a 3.3-percent increase in March, data from the Office for National Statistics (ONS) showed on Wednesday.

Housing and household services made the largest downward contribution to the change in CPI annual rates. Meanwhile, an upward contribution from a large increase in motor fuel prices was counteracted by downward effects from other categories in the transport division, according to the ONS.

Grant Fitzner, chief economist at the ONS, said there was a notable fall in annual inflation. It was led by lower electricity and gas prices due to the government's energy bill support package, along with lower global wholesale energy prices before the conflict in the Middle East.

Food prices, particularly for chocolate and meat products, and the price of package holidays also drove inflation down, he said, noting that a further increase in petrol and diesel prices, and an uptick in the cost of clothing and footwear had partially offset the downward effect.

He also pointed out that the annual cost of both raw materials and goods leaving factories continued to rise, driven again by higher crude oil and petrol prices.

Noting inflation was on the downside in April, Anna Leach, chief economist at the Institute of Directors, nevertheless, said the improvement is set to be short-lived as the impact from the Middle East conflict continues to build, with motor fuel prices rising.

Meanwhile, Suren Thiru, economies director at the Institute of Chartered Accountants in England and Wales, said April's sharp slowdown is a last interlude before the conflict-induced inflation storm, as policies on energy bill support helped temporarily lower the headline rate.

Inflation would have almost certainly fallen back to the Bank of England's 2-percent target in April, had the conflict not dramatically flipped the UK's outlook from disinflation to stagflation, he said, adding that it could be the final fall in inflation this year, with surging fuel and food costs set to push it to 4 percent this summer. Enditem