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UK inflation falls to 2.3%, raising questions over interest rate cuts

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UK inflation has dropped to 2.3% in April, marking its lowest level in nearly three years. However, the decline fell short of analysts’ expectations, dampening hopes for an imminent interest rate cut by the Bank of England.

City analysts had anticipated a reduction to 2.1%, closer to the Bank’s 2% target. This discrepancy led markets to adjust their forecasts, now predicting that the Bank’s current rate of 5.25% may not be reduced until August, rather than next month as previously speculated.

The Office for National Statistics (ONS) reported that the decrease from March’s 3.2% was primarily due to lower energy and food costs. The last time inflation was this low was in July 2021. Significant contributions to the drop included a record 27% fall in electricity and gas prices over the past year and a modest 2.9% annual rise in food and soft drink prices, the smallest increase since November 2021.

Illustrating the ongoing strain on household budgets, furniture retailers reduced prices by 0.9% between March and April, while overall goods prices dropped by 0.8% month-on-month. However, annual services inflation, reflecting inter-company charges, remained stubbornly high at 5.9%, only slightly down from March’s 6%.

Despite the overall fall in the consumer prices index (CPI), the ONS noted that higher property rents and mortgage costs kept the alternative CPIH measure, which includes housing costs, elevated at 3% year-on-year. Petrol and diesel prices rose last month, although the price of Brent crude has recently stabilised around $83 (£65) per barrel.

KPMG UK’s chief economist, Yael Selfin, suggested that the chance of an interest rate cut next month had diminished. “Falling inflation nears the Bank of England’s target but may not suffice for an early rate cut,” she stated. Echoing this sentiment, Paula Bejarano Carbo of the National Institute of Economic and Social Research noted that core inflation, which excludes volatile food and energy prices, remains high at 3.9%. Combined with robust wage growth, this persistence could compel the Bank’s monetary policy committee to maintain rates.

Prime Minister Rishi Sunak heralded April’s CPI figure as a “major moment for the economy, with inflation back to normal,” asserting that it validated the government’s economic strategy. Conversely, Shadow Chancellor Rachel Reeves argued that it was premature for the Conservatives to celebrate, highlighting the ongoing pressures of soaring prices, mortgage bills, and taxes.

In the eurozone, inflation held steady at 2.4% in April.

Separate ONS data indicated a larger-than-expected rise in public borrowing for April, with the monthly deficit reaching £20.5bn. Despite a decrease in debt payments, the high cost of servicing government debt exceeded expectations, potentially ruling out pre-election tax cuts.

Economic adviser Martin Beck from the EY Item Club described the public finance figures as disappointing, suggesting that continued higher borrowing costs would likely prevent any significant fiscal easing before the next general election.

Welsh Conservative Shadow Minister for Economy and Energy, Samuel Kurtz MS, praised the inflation drop, attributing it to the UK Conservative Government’s effective economic policies. He called on the Welsh Labour Government to support the economy by fully implementing business rates relief and reforming growth taxes.

Paul Butterworth, CEO of Chambers Wales South East, South West, and Mid, noted that while the reduction in inflation was significant, it remained above the Bank of England’s target. He expressed hope that the continued downward trend might prompt an interest rate cut soon.

Meanwhile, the British Association for Counselling and Psychotherapy (BACP) warned that despite the fall in inflation, the cost of living crisis continues to severely impact mental health. Their recent survey revealed that 74% of respondents felt their mental health was worsened by the crisis, with particularly high impacts on those with pre-existing conditions, women, ethnic minorities, and lower-income households.

BACP’s Director, Dr Lisa Morrison Coulthard, emphasised the need for government action to address these mental health challenges. The BACP has proposed a 13-point action plan to improve access to mental health services, stressing the importance of funding and support for vulnerable populations.

As the nation grapples with economic and mental health pressures, the government’s response to these intertwined issues will be crucial in the coming months.

Business

West Wales firm fined £75,000 after man killed by escaped cow

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A WEST WALES company has been fined £75,000 following the death of a 75-year-old man, Huw Evans, who was killed by a cow that had escaped from a livestock market. The incident occurred on November 19, 2022, at Whitland Livestock Market in Carmarthenshire, operated by J.J. Morris Limited.

Father-of-two Mr Evans was crossing the junction at North Road and West Street in Whitland when the cow, which was being auctioned, escaped from the market pen. The animal attacked Mr Evans, knocking him down and trampling him. He suffered multiple injuries and was airlifted to the University Hospital of Wales, where he succumbed to his injuries six days later.

A worker from J.J. Morris Limited was also injured during an unsuccessful attempt to recapture the cow. The cow eventually made its way towards Whitland Rugby Club and a railway line before being subdued and put down by Dyfed-Powys Police.

The Health and Safety Executive (HSE) launched an investigation into the incident and found that J.J. Morris Limited had failed to implement essential physical control measures to prevent cattle from escaping. The HSE concluded that the company’s risk assessment was inadequate, referencing control measures that were not in place at the market.

J.J. Morris Limited, based in Haverfordwest, admitted to breaching the Health and Safety at Work Act 1974. The company was fined £75,000 and ordered to pay £5,047.55 in costs by Llanelli Magistrates’ Court on Tuesday, June 20.

In court, Mr Evans’ son, Dafydd, expressed his grief, saying: “Dad was my best friend, and I miss him terribly. He was taken from us too soon. Losing dad has had a tremendous effect on both myself and my brother. Because of this incident, dad’s grandsons will never fully know him personally, and he will not see them grow up.”

Following the hearing, HSE inspector Rhys Hughes remarked, “This tragic incident was foreseeable and preventable. The risk posed by cattle escaping from the livestock mart should have been identified, and effective control measures implemented. The case highlights the importance of following industry guidance, which is readily accessible and outlines the requirements to safely manage cattle.”

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Business

Tata workers call first strikes in 40 years to stop steel destruction

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HISTORIC strikes in Port Talbot as Labour vows emergency talks with Tata after general election

Around 1,500 Tata workers based in Port Talbot and Llanwern will begin all-out indefinite strike action over the company’s plans to cut 2,800 jobs and close its blast furnaces.

The strike action, which begins on 8 July, will severely impact Tata’s UK operations. It is the first time in over 40 years that steel workers in the UK have taken strike action.

The escalation in industrial action comes after the workers, who are members of Unite, the UK’s leading union, began working to rule and an overtime ban on Tuesday (June 17).

Unite general secretary Sharon Graham said: “Tata’s workers are not just fighting for their jobs – they are fighting for the future of their communities and the future of steel in Wales.

“Our members will not standby while this immensely wealthy conglomerate tries to throw Port Talbot and Llanwern on the scrapheap so it can boost its operations abroad. They know South Wales is ideally placed to take advantage of the coming boom in green steel – if the right choices are made.

“The strikes will go on until Tata halts its disastrous plans. Unite is backing Tata’s workers to the hilt in their historic battle to save the Welsh steel industry and give it the bright future it deserves.”

Labour has called for Tata to halt its plans and wait until after the general election to engage in talks with the government, saying there is a ‘better deal to do’. Labour has pledged £3 billion for UK steel if elected next month, a commitment secured by Unite. Labour has also made emergency talks with Tata a priority if it wins the election.

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Business

Amendments submitted for holiday chalets scheme at trout fishery

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Amendments to a scheme granted by Pembrokeshire councillors last year after being repeatedly recommended for refusal have been submitted to county planners.

Last summer, Pembrokeshire councillors backed plans for holiday chalets at a trout fishery, despite them being recommended for refusal on multiple occasions.

Plans to provide nine accommodation cabins and ancillary works at a former fishery business at Millbrook, Manorwen, Fishguard, were backed at two meetings of Pembrokeshire County Council planning committee, despite them being recommended for refusal.

The application was backed for a second time at the committee’s May meeting, after a ‘minded to approve’ decision at the previous meeting.

The decision, a departure from the adopted Local Development Plan, meant the application would need to be referred to full council for a final decision.

Officers had repeatedly recommended Messrs L & C Williams’ application  – diversification of an existing agricultural holding and trout fishery business – be refused on the grounds it would have an unacceptable adverse impact on the character and appearance of the countryside.

The application was then considered at the July 2023 meeting of Pembrokeshire County Council, with a recommendation that the council did not endorse the resolution of the planning committee on the grounds it went against Development Plan policies which directed that planning permission should not be granted.

The application was conditionally approved by 48 votes to eight, with one abstention.

The applicants have now submitted amendments to the granted scheme, asking for revisions to the plans to include a lower carbon footprint through air-source heat exchangers for both heating and hot water and the use of solar panels.

It also includes the need for addition excavations needed and hopes to make it more disability-friendly.

The amendments will be considered at a later date.

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