UK government concedes that ONS data error exaggerated inflation figures

The Office for National Statistics (ONS) said on June 5 that the UK’s inflation figure was 0.1 percentage points too high for April due to an error in the vehicle tax data collected. Data released last month showed the country’s Consumer Price Index (CPI) inflation jumped to 3.5% in April, up from 2.6% in March.

The statistics body has released revised data showing that the UK’s CPI rose by a lower 3.4% in the 12 months to April. The revised figure still exceeds the expectations of previous analysts, who had expected it to be 3.3%.

ONS promises to use correctly weighted data from May

This is … extraordinary.

April's UK inflation figure should have been 3.4%, not 3.5%.

Everybody makes mistakes, but I don't recall the ONS getting the CPI wrong before!https://t.co/XHF0O2vka1

— Julian Jessop (@julianHjessop) June 5, 2025

The ONS acknowledged that on Thursday, it realized an error in the Vehicle Excise Duty (VED) data provided by the Department of Transport, which is part of the information used to calculate inflation. It said the incorrect data overstated the number of vehicles subject to VED rates applicable in the first year of registration.

The agency also noted that the error overstated the Retail Prices Index (RPI) annual rates by 10 basis points for the year to April 2025. It acknowledged that no other periods were affected by the miscalculation.

“In line with our consumer prices revisions policy, these statistics will not be amended. However, we are reviewing our quality assurance processes for external data sources in light of this issue.”

–The Office of National Statistics.

The fault added to the agency’s already stained record, which has previously been criticized in some quarters for the accuracy and reliability of its data. The government also launched an investigation in April into the effectiveness of the official economic data it publishes. 

ONS apologized for the mistake and said it would use the correctly weighted data from May 2025’s figures onward. The agency will release the correct vehicle excise duty data in May’s inflation announcement.

The UK currently has the second-highest inflation rate of any major Western European economy, behind the Netherlands. Despite the error in inflation data, Britain’s higher-than-expected surge in April also prompted investors to bet on the Bank of England slowing its already gradual pace of interest rate cuts.

BoE expects to cut interest rates amid Trump’s trade policies

Finance Minister Rachel Reeves said she was disappointed since the UK was far from the double-digit inflation it had under the previous administration. She also revealed her determination for the country to go further and faster to put more money in people’s pockets.

According to JP Morgan economist Alan Monks, the inflation data called into question the likelihood of a rate cut over the summer. He told investors the surprise would reinforce BoE’s hawkish bias since there is no chance of a June cut, and the likelihood of an August cut shifted lower.

The BoE forecasted that inflation would hit 3.7% by September. However, some central bank officials disagree with its key assumptions that the rise in inflation would not have longer-running effects on pricing. BoE Chief Economist Huw Pill said last week that interest rate cuts had been too fast given strong wage pressures on inflation. 

Britain’s central financial institution lowered rates by a quarter point to 4.25% on May 8 in a three-way split vote. Two members of the Monetary Policy Committee favored a bigger cut, while two – including Pill – favored a hold.

Trade uncertainty still lingers as U.S. President Donald Trump’s deadline for countries to present their improved trade negotiations passed without any concrete developments. A BoE survey from May 9 to May 23 revealed on Thursday that only 12% of British businesses expect to be directly affected by recent changes in U.S. trade policy.

Britain secured a partial exemption from Trump’s levies in early May, although the details will be finalized. The country’s financial institution said 70% of businesses surveyed in May as part of its monthly Decision Maker Panel expected that U.S. tariffs would not impact their sales, prices, or investment plans.

BoE Governor Andrew Bailey acknowledged that domestic wage and price developments will likely be more important for future BoE rate cuts than U.S. trade policy.

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