Data error may have pushed up UK inflation, rate cut bets in April: ONS

The data error means the inflation rate would have been closer to the 3.3 per cent consensus forecast and 3.4 per cent predicted by the central bank
Bloomberg
Britain's statistics agency said it overstated the official inflation rate due to a mistake in numbers it was given on vehicle taxes, the latest in a string of errors to plague the country's economic data.
The Office for National Statistics said Thursday the headline inflation rate was 0.1 per cent higher than it should have been in April's market-rattling figures, as a result of incorrect vehicle excise duty data from the government's transport department. While the ONS will not revise its inflation estimate, it will use the correct data for May.
The error may have contributed to the sharp market reaction to April's inflation data. It means that the spike in prices seen in April was less severe than first thought after inflation jumped to a 15-month high of 3.5 per cent.
The bigger-than-expected pick-up in price pressures in April's initial data prompted traders to cut bets on an easing in interest rates by the Bank of England. It helped to retrench expectations of fewer reductions after the central bank's hawkish tone at the May meeting.
The data error means the inflation rate would have been closer to the 3.3 per cent consensus forecast and 3.4 per cent predicted by the central bank and a plurality of economists including Bloomberg Economics. Markets were little changed following Thursday's statement, fully pricing in one more rate cut for this year.
Other volatile factors are thought to have pushed up April's figure with the ONS collecting price data for air fares over Easter when demand spikes.
Credibility
The error is the latest to undermine the credibility of the UK's official economic statistics after a series of high-profile problems that first hit its labor market statistics before spreading to other numbers. It is the second time in recent months that its price statistics have been affected by errors with the ONS suspending its producer price figures in March.
The ONS has faced mounting pressure and is awaiting the outcome of a government probe into its failings. It is also without a permanent head after National Statistician Ian Diamond resigned last month on health grounds.
The latest error related to an overstatement of the number of vehicles subject to vehicle excise duty rates applicable in the first year of registration. VED is a tax applied to every vehicle using public roads in the UK, adjusted according to their environmental impact. It is expected to raise over £9 billion ($12.2 billion) in the current fiscal year, according to the Office for Budget Responsibility.
'This has the effect of overstating the headline Consumer Price Inflation (CPI) and Retail Prices Index (RPI) annual rates by 0.1 percentage points for the year to April 2025 only. No other periods are affected,' the ONS said in a statement. 'We are reviewing our quality assurance processes for external data sources in light of this issue.'

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

NDTV

an hour ago

• NDTV

U-Turning Oil Supertankers Cross Strait Of Hormuz After Avoiding It

Two supertankers, each capable of hauling about 2 million barrels of crude, headed through the Hormuz shipping strait at the mouth of the Persian gulf, having performed U-turns in the past 24 hours. On Sunday, the Coswisdom Lake and South Loyalty entered the waterway and abruptly changed course, according to vessel tracking data compiled by Bloomberg. After a pause, both then headed back through Hormuz. One was almost through and the other entering it, signals from each showed on Monday. The two vessels' movements into the world's most important oil-producing region come as shipbrokers and others in the oil tanker market report a cautious willingness to enter the stretch of water that's pivotal to the global oil trade. Separately, Greece's shipping ministry warned on Sunday that the country's owners should think twice about Hormuz transit and instead head to a safe port. While neither tanker is Greek, the communication from Athens underscored an initial wariness about going through an area that handles about a fifth of the world's oil. Greece is the owner of the world's largest tanker fleet by transportation capacity. Coswisdom Lake is managed by Cosco Shipping Energy and South Loyalty by Sinokor Merchant Marine, according to industry databases. Both are very large crude carriers, or VLCCs. Neither company immediately responded to emailed requests for comment. There remain examples of wariness. Two large Japanese shipping companies said they will cut exposure to the strait, an unavoidable searoute for any vessel entering the Persian Gulf.

First Post

an hour ago

• First Post

Oman to become first Gulf country to impose income tax

In a bid to diversity revenue sources and reduce public debt, Oman has decided to impose personal income tax. This would make Oman the first Gulf country to impose income tax. read more Omani men pass in front of Canadian cafe and bake shop Tim Hortons in City Center Mall in Muscat, Oman, February 11, 2019. Picture taken February 11, 2019. (Reuters/Hamad I Mohammed) Oman has announced the imposition of personal income tax, becoming the first Gulf country to do so. The move to collect income tax is part of Oman's attempt to diversify revenue sources and reduce public debt. In the petroleum-rich Gulf region, countries do not impose a personal income tax. Firstly, governments earn plenty of revenue from oil and gas. Secondly, zero personal income tax attract high net worth individuals. Thirdly, these countries make up for revenue lost from foregoing income tax with corporate income taxes, value-added tax (VAT), customs duties and fees. STORY CONTINUES BELOW THIS AD The personal income tax collection will start in Oman in 2028. What we know of Oman's income tax? Oman will collect 5 per cent personal income tax on taxable income from people earning more than 42,000 Omani rials ($109,091) per year starting 2028, according to Reuters. 'The law also includes deductions and exemptions that take into account the social situation in the Sultanate of Oman, such as education, healthcare, inheritance, zakat, donations, primary housing,' the news agency quoted Omani tax authority as saying. The tax authority said such a tax will apply to around 1 per cent of the Omani population. Economy Minister Said bin Mohammed Al-Saqri was quoted as saying by Bloomberg that the measure will reduce reliance on oil revenues by diversifying public revenue while maintaining social spending. Even as no other Gulf country has announced such a measure, experts have said that might change in coming years as expenditures of governments rise and revenue sources remain stagnant, leading to deficits. Saudi Arabia and Bahrain are set to have deficits this year. The International Monetary Fund (IMF) has said that more Gulf countries may introduce personal income tax in coming years, particularly as they prepare for a world in which fossil fuel loses

Business Standard

an hour ago

• Business Standard

Rupee slips 16 paise as West Asia tensions flare up; ends at 86.74/$

The Indian rupee fell after a day of advance as the US strikes at nuclear sites in Iran triggered a risk-off sentiment among investors. The domestic currency depreciated 16 paise to end at 86.74 against the dollar, after closing at 86.59 on Friday, according to Bloomberg. The currency has fallen 1.32 per cent so far this month. Rupee traded weak as the dollar index appreciated toward the 99 mark, indicating broader currency market imbalances, according to Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities. Geopolitical tensions escalated after the US conducted airstrikes on three nuclear-related sites in Iran, raising volatility across global markets, he said. Iran's Parliament has reportedly approved the closure of the Strait of Hormuz after the US struck three nuclear sites over the weekend. US President Donald Trump declared the three facilities 'totally obliterated,' and warned of greater attacks unless Iran makes peace with Israel. Crude oil prices pared gains after it rose as much as 5.7 per cent during the session. Brent crude price was up 0.25 per cent at $77.20 per barrel, while WTI crude prices were higher by 0.28 per cent at 74.05, as of 3:30 PM IST. Despite India's reliance on Iranian oil, it has diversified its sourcing from Russia and the US, reducing its dependence on the Gulf, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "However, higher oil prices could impact the current account, potentially weakening the rupee slightly. " The Reserve Bank of India (RBI) is likely to intervene to maintain market stability, and its forex reserves have reached $698 billion, nearing the all-time high of $705 billion, providing an ample buffer, Bhansali said. Meanwhile, after depreciating 1.29 per cent against the dollar this financial year, the rupee is expected to weaken more because of West Asian military conflicts, with the expectation that prices of crude oil will rise. According to a Business Standard poll, the majority of the respondents expect the rupee to depreciate to 87 a dollar by the end of July.