Adam Smith Institute

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Chart of the week: UK inflation dips in year to April

 

Summary: UK trimmed mean inflation is 2% - exactly

What the chart shows: The chart shows UK headline consumer price inflation, the old RPI-X measure and trimmed mean inflation, all as 12-month % changes

Why is the chart important: The Bank of England has forecast that inflation, while coming down, will remain above target for the foreseeable future. But the headline or overall rate of inflation is subject to a number of volatile influences. In some countries, eg, the United States, underlying inflation is measured by stripping out food and energy changes. By contrast, a so-called ‘trimmed mean’ measure strips out the fastest and slowest changing components every month, regardless of which they are, in order to achieve a better picture of underlying trends. April data show that the trimmed mean rate is bang on target at 2%, implying that the headline rate could come down more rapidly than expected – as in fact it already did in April