Cost of living - latest: UK inflation doesn't compare well to G7 (2023)

This is what Grant Fitzner, chief economist for the Office for National Statistics, has been saying in morning interviews.

"We are no longer in double digit territory," he told BBC Radio 4. "We have seen falls in bread, cereals, fish, milk, cheese, eggs, sugar, jam and honey - so that is positive."

But...

"Let's not forget a lot of supermarkets have fixed contracts which can take six or 12 months to roll off, as those contracts expire you would expect them to be renegotiated at lower prices.

"It'll take some time for this to wash through to retail prices."

Chancellor Jeremy Hunt has given his response to the inflation figures.

"The IMF said yesterday we've acted decisively to tackle inflation but although it is positive that it is now in single digits, food prices are still rising too fast.

"So as well as helping families with around £3,000 of cost of living support this year and last, we must stick resolutely to the plan to get inflation down."

We've also had comments from shadow chancellor Rachel Reeves, who said: "As bills keep surging, families will be worried food prices and the cost of other essentials are still increasing.

"They will be asking why this Tory government still refuses to properly tackle this cost of living crisis, and why they won't bring in a proper windfall tax on the enormous profits of oil and gas giants."

She said Labour's mission was to secure the highest sustained growth in the G7 to make families better off.

Core inflation, which excludes energy, food and tobaccoprices, rose to 6.8% - the highest rate since March 1992.

The exclusion of these more volatile elements gives us a more precise idea of how the economy is looking, and the figure is likely to concern the Bank of England ahead of its next interest rate decision on 22 June.

We do have another inflation figure before then, however.

We've been drilling into the Office for National Statistics data released a short time ago. The ONS points to four areas where inflation either remains sky high or rose.

Food and non-alcoholic beverages...

"... saw an annual rise of 19.1% in April 2023 compared with an annual rise of 19.2% in March 2023," according to the ONS.

Price movements on bread and cereals, fish, milk, cheese and eggs, and sugar, jam and honey contributed to this slight drop in this area, the ONS added.

Vegetable prices rose at a faster rate in April, however.

Recreation and culture...

"Prices for recreational and cultural goods and services rose, overall, by 6.4% in the year to April 2023, up from 4.6% in March," the ONS said.

"Audio-visual equipmentprovided the largest positive contribution, which saw a monthly increase of 1.5%compared with a fall of 2.8%in the equivalent time period last year."

The ONS noted, however, that "movements in this class depend, in part, on the composition of bestseller charts".

Therefore, short-term movements in the rate "should be interpreted with a degree of caution".

Alcohol and tobacco...

"Rose by 9.1% in the year to April 2023, up from 5.3% in March. The main contribution tothis increase came from an 11% rise in tobacco prices in the year to April 2023," the ONS said.

The increase was influenced by the rise in tobacco duty, which had not increased since October 2021.

Wine and beer also contributed to upward movement.

Transport...

"The annual inflation rate for transport was 1.6%, the first increase in its rate of annual inflation in nine months," the ONS said.

"An important contributor to this rise was the purchase of second-hand cars, which saw an increase of 2.7% between March 2023 and April 2023 compared with a fall of 3.1% in the same time period last year."

Motor fuel, however, saw declining inflation.

The 8.7% figure we've just told you about is higher than 7.6% in Germany, 6.9% in France, 4.4% in Canada, 3.8% in the US and 3.4% in Japan.

It is lower than Italy's figure of 8.8%, however.

The overall EU27 figure is 8.1%.

This chart was released by the ONS this morning...

Inflation has fallen below 10% for the first time since August.

It was down to 8.7% in April - from 10.1% in March.

Economists polled by the Reuters news agency predicted 8.2% - but once again the drop isn't as large as expected.

Electricity and natural gas prices leapt by 40.5% and 66.8% respectively in April 2022, data from Pantheon Macroeconomics showed. Comparatively, they held steady last month, which has brought the figure down.

The ONS said this morning: "The easing in the annual inflation rate in April 2023 mainly reflected price changes in the housing and household services division, particularly for gas and electricity.

"This was offset partially by upward effects coming from recreation and culture, alcoholic beverages and tobacco, communication, and transport."

Inflation is the rate at which prices are rising.

It has been sky high for more than a year now, in large part because of global factors such as the Ukraine war, which has resulted in Russia squeezing its gas supply, leading to higher energy prices.

Just because inflation comes down, it doesn't mean prices are. Anything over zero means prices are rising - we'd needdeflation for prices to fall, and few people expect that to happen.

Netflix has begun sending emails to UK customers who are sharing their accounts with people "outside their household".

The streaming giant said a Netflix account was "for use by one household" and those wanting to share theirs must pay £4.99 to do so.

Netflix posted a statement online last night which read: "Everyone living in that household can use Netflix wherever they are - at home, on the go, on holiday - and take advantage of new features like Transfer Profile and Manage Access and Devices.

An attached screenshot of the email details ways customers can share their accounts.

These included allowing users to "transfer a profile" to a "new membership that they pay for" or buying an extra member for the price of £4.99 extra per month.

Netflix has changed its tune since joking on Twitter that "Love is sharing a password" as it was quickly expanding in the UK in 2017.

Read the full story here...

Falling milk prices have helped drive grocery inflation lower for a second consecutive month, according to industry data.

Kantar Worldpanel, which tracks supermarket sales and prices, measured the annual rate of groceryinflationat 17.2% over the four weeks to 14 May.

That was down from 17.3% in the previous four-week period but still at the third-highest level since the 2008 financial crisis.

The cost of four pints of milk, which had risen due to higher feed, production and transportation costs, fell by 8p over the four weeks.

But Kantar added that prices were still much higher than they were 12 months ago, at £1.60 currently compared to £1.30.

You can read the full story on food inflation below while we wait for the overall figures from the ONS at 7am.

Economists polled by the Reuters news agency see the annual inflation rate easing to 8.2% in April from the current 10.1%.

Electricity and natural gas prices leapt by 40.5% and 66.8% respectively in April 2022, data from Pantheon Macroeconomics showed. Comparatively, they held steady last month, which should impact the ONS figure released at 7am.

It is, however, only right to point out expert predictions have been too low in the previous two months as inflation remained unexpectedly in double digits.

What is inflation?

Inflation is the rate at which prices are rising.

It is currently through the roof at 10.1%, in large part because of global factors such as the Ukraine war, which has resulted in Russia squeezing its gas supply, leading to higher energy prices. The conflict has also seen tonnes and tonnes of Ukrainian grain stuck in ports, contributing to increased food costs.

For obvious reasons, governments want to keep inflation low - the target is 2%, and Rishi Sunak has pledged to get closer to that, 5%, this year.

But just because inflation comes down, it doesn't mean prices are. Anything over zero means prices are rising - we'd need deflation for prices to fall, and few people expect that to happen.

Bank of England policymakers faced criticism during a Treasury Committee meeting over the failure to predict a prolonged rise in inflation.

Conservative MP John Baron accused the Bank of a "woeful neglect of duty" in not bringing inflation close to its 2% target, which he said is causing "real pain" to households and businesses.

Huw Pill, the Bank's chief economist, acknowledged its economic forecasting models have led to mistakes.

He said: "We recognise our forecasts on inflation have been too low.

"We are trying to understand why we have made those errors, interpret those errors in terms of the behaviour, and make an assessment in terms of how it will continue."

It came as the Bank earlier this month revised its inflation expectations after saying food price inflation had been more stubborn than expected.

It previously thought the UK's Consumer Prices Index (CPI) inflation could fall as low as 1% by the middle of next year, but it is now predicted to reach about 3.4%.

Bank governor Andrew Bailey responded to criticism that the Bank had lost the confidence of the public over its economic modelling and interest rate decisions.

He said: "I think there are some very big lessons in how we operate monetary policy in the face of very big shocks. Because the shocks that we have faced have been unprecedented.

"I think there are big lessons about how we operate policy in that world - in a world of very big uncertainty."