Inflation Numbers Worry Economists Despite Some Good News

People sometimes refer to economics as the "dismal science". When you hear economists speak, you can see why.

Prices are rising less quickly each year. This is called inflation. In March, inflation was at 10.1%. In April, it had dropped to 8.7%. This is the first time it has been out of double digits since last summer.

The cost of living crisis is getting better.

Why are economists sad today?

One thing to remember is that there are two problems related to inflation. One of them is good news, while the other one is not. It all depends on what we're talking about.

First, let's talk about the positive news. There is a ray of hope. There is some good news to report. Here's the good part. Let's start with something positive. The good news is...

Energy prices have been increasing over the past few years. This is the main cause of high cost of living. We see this increase in our household bills and fuel costs. It affects everywhere else too.

Lots of people have had a really bad time lately. But there is good news. Things are getting a little bit better.

Electricity and gas bills are more expensive now than before but the increase is not as fast as before. Inflation measures the rate of change each year, not the actual price.

Energy bills went up a lot over a year ago. Now, the yearly energy price increase isn't as high as before.

Tomorrow, Ofgem will reveal the new energy price cap. This will impact household bills in the summer. The good news is that it's predicted to decrease. This is the first time it's happened in years.

There is also something else happening here.

Economists get more worried about inflation than just high fuel or food prices. These prices can change a lot each year and hurt families.

Economists are concerned about a specific number. This number is important to them. They are worried about it.

Remove the unpredictable parts of inflation to get "core inflation". This shows the true trend of inflation.

High core inflation = high overall inflation for long time. Core inflation is high now.

The rate increased in April instead of dropping. It went up from 6.2% to 6.8%. This is the highest level in 30 years.

Economists are worried about a number. The number suggests inflation is becoming embedded in the economy. People may think prices will keep going up for a long time. This worries economists.

The headline number is good news, but the figures show something else. It's not good.

Inflation is harder to control than we thought. It's a big issue.

The Bank of England might think it still has work to do after looking at today's numbers.

The Bank's duty is to keep inflation near 2%, but current stats make it difficult. They may increase interest rates to 4.75% at their next meeting.

The pressure on households may increase more. It could be even higher.

The cost of living crisis is still here.