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Tuesday, 15 May, 2001, 08:57 GMT 09:57 UK
UK inflation remains steady
A basket full of shopping
The UK shopping basket is slightly more expensive than last month
The UK's underlying rate of inflation rose 0.1% in April to 2%, according to figures from the Office for National Statistics.

House
Lower interest rates have pulled down the cost of home ownership
But the headline rate, which includes mortgage payments, slowed to a 16-month low, as interest rate cuts took effect.

The figures will reinforce Labour's claim that it has delivered Britain's lowest inflation rates for a generation as it seeks re-election on 7 June.

Inflation remains well below the Bank of England's 2.5% target, as has been the case for more than two years.

Downward pressure

Underlying inflation was up from 1.9% in March, and defying expectations of a slight fall to 1.8%.

Clothes on display
Clothes and shoes are cheaper than they used to be
The Office for National Statistics said the overall retail price index, which measures the rate of inflation, rose 0.5% on the month to give an annual inflation rate of 1.8%, down sharply from 2.3% the month before, but in line with economists' expectations.

The largest downward pressure came from changes in tax relief on home loans which dropped out of the index following its abolition in April 2000.

Another large downward effect came from prices for clothing and footwear, particularly women's and children's garments.

Prices fell 5.4% year-on-year, the biggest rate of deflation since records began in 1947.

Foot-and-mouth

Motoring costs also had a large downward effect due to fuel duty cuts introduced in the March budget.

The largest upward pressure came from fuel due to increases in gas prices, compared to falls a year ago.

Seasonal food also had an upward effect due in part to supply shortages. But there was also a small downward effect from beef and pork prices because of discounting by retailers.

However, there was little evidence of much impact on prices from the foot-and-mouth disease outbreak.

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See also:

10 May 01 | Business
UK trims rates 0.25%
19 Apr 01 | Business
UK inflation heads lower
20 Mar 01 | Business
UK inflation nudges up to 1.9%
13 Feb 01 | Business
UK inflation at record low
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