An analysis of UK inflation data showed a sharp increase in the service sector. The main reasons were the increase in the road tax and the dates of Easter celebrations. According to forecasts, this growth is temporary: service sector inflation, which reached 5.4% in April, will drop to 4.5% this summer, in line with the Bank of England's plans to cut rates through 2026. About half of the increase in inflation is due to the change in the road tax, the effect of which will disappear from the annual analysis in a year. The remaining increase is due to the rise in the price of air tickets and travel packages due to the early dates of Easter, which led to a 28% jump in air ticket prices in April. These effects will weaken in the coming months. The data also points to disinflation in other service sectors such as restaurants, healthcare, and rental housing. The contribution of rent, amounting to 1% in the inflation of services, may be halved by next year due to a reduction in the state limit on the price of social housing. Despite the current high inflation figures, analysts do not expect accelerated action from the Bank of England. However, a rate cut is likely in August, while maintaining a moderate pace of adjustments until 2026.
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