CPI inflation falls from 10.4% to 10.1%

CPI inflation falls from 10.4% to 10.1%

19 Apr 2023

The latest CPI figures this morning showed annual inflation dropping to 10.1%. This fall comes after the unexpected increase in inflationary growth last month and, whilst higher than market estimates, provides welcome encouragement that inflation can be kept to manageable levels by the end of the year.

Longer term expectations of inflation have also remained broadly unchanged over the previous month with future, further falls in inflationary growth already priced in. As a result, today’s announcement is unlikely to have a material impact on pension schemes’ funding levels.

Charlotte Jones, Senior Consultant, XPS Pensions Group, commented: “Although long-term inflation expectations have remained unchanged over the previous month, market conditions for DB pension schemes are significantly more favourable today than they were a year ago. XPS’s DBUK funding tracker estimates funding improvements of c.£270bn in aggregate over the last year driven by the significant changes in long-term inflation and interest rate expectations. However, individual schemes will be impacted differently. With some relative stability in market conditions, it is important that schemes assess their funding position and opportunities to re-shape their long term strategies.”