Britain's headline annual inflation rate slowed to a 16-month low in April as interest rate cuts pulled mortgage payments down, official data showed today.
National Statistics said the overall retail price index, used by wage negotiators as a benchmark for pay settlements, rose 1.8 per cent year-on-year, down sharply from 2.3 per cent the month before but in line with economists' expectations.
But once mortgage payments are stripped out underlying inflation or RPIX nudged higher to an annual rate of 2 per cent from 1.9 per cent in March and defying expectations of a slight fall to 1.8 per cent.
This is still well below the Bank of England's government-set 2.5 per cent target as has been the case for over two years.
The figures will reinforce the government's claim it has delivered Britain's lowest inflation environment for a generation as it seeks re-election on June 7th.
Prime Minister Tony Blair, campaigning on a track record of sound economic management, is way ahead in opinion polls and is expected to win a coveted second term.
Economists said the benign inflation data would reinforce market expectations that the Bank of England will trim interest rates for a fourth time this year in the months ahead.