By BLOOMBERG

LONDON • UK inflation slowed to a 13-month low in April, approaching the Bank of England’s (BoE) 2% target faster than economists had anticipated.

The rate of price growth fell to 2.4% from 2.5% in March, defying analysts’ predictions for no change. That sent the pound to the lowest level this year yesterday, and a market gauge of the likelihood of an August interest-rate hike slid to about 41%, from 47% on Tuesday.

BoE policymakers refrained from raising interest rates this month following a snow-blighted first quarter (1Q), but they remain concerned a lack of spare capacity may be starting to fuel domestically generated price pressures. Still, with the headline rate having dropped from 3.1% in November, the report complicates the case for an immediate rate rise, according to Fidelity International.

The BoE “has struggled to read the direction of price changes recently”, said Ed Monk, the firm’s associate director for personal investing. “Inflation surprised to the upside at the end of last year, but the bank has overestimated inflation since then. With inflation trending lower, it only makes it harder for the BoE to raise rates.”

The reading for April is in line with BoE officials’ predictions for the 2Q as a whole. They see a further drop to 2.2% by year end, before the measure falls to the 2% target in two years, partly because the pass-through of the pound’s depreciation since the Brexit vote is happening faster.

The pound fell after the Office for National Statistics report, dropping 0.6% to US$1.3352 (RM5.34). It earlier touched US$1.3349, the lowest level since December.