Inflation may have dropped to its lowest level for more than a year, but there was little to be cheery about in the latest official figures as food prices continued to race higher.
The data from the Office for National Statistics (ONS) showed Consumer Prices Index (CPI) inflation fell to 8.7 per cent in April, down from 10.1 per cent in March, as energy prices stabilised after sky-high rises a year ago.
However, food price inflation is still close to levels not seen for more than 45 years, at 19.3 per cent, keeping household finances very much under pressure.
Here we look at the key questions surrounding the latest data:
If inflation has dropped so sharply, why are experts so concerned by the latest figures?
The fall in inflation was expected to be far greater, with experts pencilling in a drop to 8.2 per cent in April.
It was also higher than the 8.4 per cent predicted by the Bank of England just two weeks ago.
CPI has come in higher than predicted for three months in a row now, as inflation has proven painfully stubborn.
And while welcome, the fall in inflation was expected, given that energy prices have stabilised since the energy price guarantee came into effect last October.
What is behind April’s higher-than-expected inflation?
Rocketing food prices appear to be the key reason why inflation failed to fall as fast as had been hoped.
Consumers continue to face eye-watering price increases on kitchen-cupboard essentials such as olive oil, up 49 per cent on a year ago, cheese, now 42 per cent more expensive, and milk and baked beans, both up 39 per cent, according to the ONS data.
On Tuesday, Chancellor Jeremy Hunt said the government “stands ready” to update pricing rules after he spoke to representatives from the food industry to raise concerns over the rocketing cost of groceries.
There have been some small signs that food prices may soon be on the descent, but retailers appear to be passing on little in the way of meaningful cuts, despite reporting that commodity prices are beginning to ease.
What do the higher-than-expected inflation figures mean for me?
Economists are saying that April’s higher-than-forecast CPI may mean yet more interest-rate rises on the cards, which will pile further pain on financially stretched households.
The Bank of England has already increased rates 12 times in a row, to 4.5 per cent this month, as it battles to curb inflation.
It had been hoped that the May increase would be the last for a while, but experts said this month’s 8.7 per cent reading increases the chances of further increases.
James Smith, an economist at ING, said data “undoubtedly puts pressure on the Bank of England to hike by another 25 basis points in June”.
But, he added, “it’s not a foregone conclusion, not least because we still have another set of data before the meeting”, and pointed to the fact that jobs and wages data have been “moving in the right direction”.
When can we hope to see respite from the cost crisis?
Bank of England governor Andrew Bailey insisted in a House of Commons committee hearing with MPs on Tuesday that inflation has “turned the corner”.
But the Bank also admitted it had made some errors in its inflation forecasting, which had meant it underestimated the food-price shock.
It predicted earlier this month that inflation would fall to 5.1 per cent in the fourth quarter of 2023, which would narrowly allow the government to hit its target to halve inflation by the end of the year.
The latest inflation surprise has cast doubt over the government achieving that goal, although Mr Hunt said the target was “still absolutely deliverable”.
How can the government be so sure it will hit its inflation target?
Energy prices are expected to fall sharply from July, with Ofgem expected to confirm on Thursday the new price cap level when the current energy price guarantee limiting bills to £2,500 a year comes to an end.
Consultancy company Cornwall Insight predicts that households can expect their annual bill to fall by between £446 ($550) and £2,054 a year, based on falling wholesale energy prices.
But if food prices fail to begin to fall soon and with prices still rising across the board on everything from rent to council tax, water and broadband bills, that inflation target could yet prove elusive.
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Tearful appearance
Chancellor Rachel Reeves set markets on edge as she appeared visibly distraught in parliament on Wednesday.
Legislative setbacks for the government have blown a new hole in the budgetary calculations at a time when the deficit is stubbornly large and the economy is struggling to grow.
She appeared with Keir Starmer on Thursday and the pair embraced, but he had failed to give her his backing as she cried a day earlier.
A spokesman said her upset demeanour was due to a personal matter.
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Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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Most memorable achievement: Leading my first city-wide charity campaign in Toronto holds a special place in my heart. It was for Amnesty International’s Stop Violence Against Women program and showed me the power of how communities can come together in the smallest ways to have such wide impact.
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