Underlying inflation at record low

The headline rate of inflation jumped to 3.0 per cent in April, the Office for National Statistics said today. This compared with 2.6 per cent the previous month.

But the good news is that the underlying rate of inflation, which excludes mortgage interest payments, is at its lowest level since records began in 1975. It fell to 1.9 per cent from 2.0 per cent in March (well below the Government's 2.5 per cent target).

The record low will be seen as reducing the likelihood of further interest rate rises from the Bank of England's Monetary Policy Committee.

The headline figure was increased by the abolition of tax relief on mortgage payments at the start of April. It was also affected by higher tobacco duties announced in the Budget.

Upward pressure was offset by cuts in the price of water and sewerage services imposed by the industry regulator. Also, motoring costs rose more slowly than April last year, when oil prices jumped sharply.