UK inflation eases upwards but GB property prices soar
20 May 2014Follow @PwC_UK
Higher travel costs helped push April’s inflation rate to 1.8% - the first increase in 10 months – according to data from the Office of National Statistics, published today.
Consumer Prices Index (CPI) inflation rose to 1.8% in April from 1.6% in March, while ONS said that unusually, Easter fell in April this year and this probably impacted on travel costs in the month.
Today's ONS data also shows that average UK house prices jumped by 8% in the 12 months to March 2014, although average UK house prices in April 2014 actually fell marginally by 0.4% as compared to March.
However, London property prices soared by more than twice the UK average, growing by 17% in the year to March 2014; London prices also increased by 0.2% in April as compared to March, ONS reported.
Commenting on today’s data, Dr Esmond Birnie., PwC’ chief economist in Northern Ireland said:
“April's rise in the CPI rate suggests that the cost of living has again overtaken wages, where annualised earnings rose 1.7% in the three months to February 2014.
“However, despite the increase in inflation, the rate is still below the Bank of England's 2% target and the April increase is probably a blip caused by Easter Sunday falling at the end of March in 2013, while this year it was later, in mid-April.
“Politicians should be less concerned over the inflation rate than spiralling property prices.
“On average, we expect UK property prices to grow by 8% this year and 6% in 2015, but average London prices could grow by around 23% over the same period; that would take the average London property to almost £560,000 at the end of 2015 - nearly double the UK average - and up from £450,000 at the end of 2013.
“On the other hand, Northern Ireland is experiencing only marginal property price recovery and high levels of negative equity and if the banks act to curtail mortgage lending in GB that could have an unfortunate effect here, where modest property price recovery is welcome.”
Email: Esmond Birnie