British retail price inflation steadied in April, confounding expectations for another rise, as tumbling oil prices offset hefty increases in local government taxes, official data showed today.
The Office for National Statistics said RPIX, which excludes volatile home loan payments, rose 0.7 per cent on the month, steady at 3 per cent year-on-year and confounding forecasts for another rise above the government-set 2.5 per cent target rate.
Many analysts predicted that inflation had peaked and said that while the data did not increase the odds of another interest rate cut, they left policymakers room to ease borrowing costs again if the economy fails to gain traction.
In its quarterly inflation report last week the Bank of England said the current run of above-target inflation was temporary, predicting RPIX would fall back to below target by early next year despite broad weakness in the pound.
Market reaction was subdued, although UK government bonds and short sterling futures pared earlier losses. The pound dipped a bit against the dollar and the euro.