UK inflation set to finally slip out of the double digits

UK INFLATION is poised to tumble to its lowest level in over a year in what is expected to begin a steady descent from its multi-decade highs, new figures out this week are likely to reveal.

The rate of price increases in April is tipped to have dropped markedly to 8.2 per cent last month, down from 10.1 per cent and to the lowest level since March 2022 when it rose to seven per cent, according to City analysts.

Living costs have been rising rapidly for more than a year, initially driven upward by supply chains buckling under the weight of a sudden surge in demand after Covid-19 lockdowns were ditched.

Russia’s full-scale invasion of Ukraine lit a rocket under international energy prices, pushing up UK household energy bills to what could have been more than £4,000 without the government stepping in and capping bills at £2,500 last year.

While that intervention has averted the biggest hit to average living standards on record, it has knocked Britain’s finances, forcing the government to borrow £22.4bn last month, markets expect.

A combination of poor weather and the Russia-Ukraine war jolting raw material production has also squeezed food supplies, putting upward pressure on supermarket prices, which have climbed nearly a fifth over the last year. However, the cost of living crisis that has knocked the poorest households’ finances is poised to slowly ease as the year progresses, but food price inflation may take longer than headline consumer prices to decelerate.

Any signs that core inflation –which is running over six per cent –is failing to fall substantially in response to the Bank of England’s 12 successive interest rate rises could seal another increase at the Monetary Policy Committee’s next meeting on 22 June.

Bank governor Andrew Bailey and other rate setters will break down the reasons why they lifted borrowing costs earlier this month at a grilling from MPs on the Treasury Committee tomorrow.

Latest purchasing managers’ indices out tomorrow could show the UK economy is racing away from the muchtipped recession, while retail sales numbers from the ONS on Friday are poised to show families are trimming spending in response to high inflation.

Easyjet’s pretax losses fell in line with expectation last week at £411m, while net debt of £200m was unchanged. Easyjet holidays expects to exceed expectations for pretax profits in FY23. Peel Hunt analysts have doubled down on their buy rating and set a target price of 650p.

Peel Hunt have doubled down on their advice for investors to row back positions in DNA and RNA sequencing specialist Oxford Nanopore after an update to investors last week. Analysts said the update “does not include developments that we were not aware of”. They say reduce holdings of the stock and set a target price of 170p.

Analysts at Peel Hunt have doubled down on their buy rating for homebuilder Vistry after the firm revealed “robust” trading over the past six weeks and hiked its fullyear profit expectations by £10m to “in excess of £450m”. Shares have risen 31 per cent in the year to date. Peel Hunt says buy the stock with a target price of 1,075p.