UK inflation data now "oops" Vehicle tax statistics error led to April CPI overestimation by 0.1 percentage points.

The UK Office for National Statistics has stated that it overestimated the official inflation rate due to incorrect vehicle tax data received. The agency mentioned that due to inaccurate vehicle excise duty data provided by the government's Department for Transport, the overall inflation rate that shook the market in April was 0.1 percentage point higher than it should have been. This is the latest in a series of errors plaguing UK economic data. While the Office for National Statistics will not revise its inflation estimates, it will use the correct data in May. This error may have exacerbated the market's sharp reaction to the April inflation data. This means that the price surge in April was not as severe as initially thought, with inflation jumping to a 15-month high of 3.5%. The increase in price pressures in the preliminary data for April exceeded expectations, prompting traders to reduce bets on a rate cut by the Bank of England. This helps to reduce expectations for a reduction in the number of rate cuts, as the Bank of England had made hawkish comments at its May meeting. The data error means that the inflation rate was supposed to be closer to the general forecast of 3.3%, and the 3.4% predicted by the Bank of England and the majority of economists, including Bloomberg Economics. Following Thursday's statement, the market saw little change, fully digesting the expectation of another rate cut later this year. Other factors are believed to have pushed up the data for April, with the Office for National Statistics collecting airfare data during the Easter period when demand was high. Credibility Damage This error is the latest example of weakening the credibility of official UK economic statistics, with a series of notable problems first affecting UK labor market statistics before spreading to other data. This is the second time in recent months that UK price statistics have been affected by errors, with the Office for National Statistics pausing producer price data in March. The Office for National Statistics is facing increasing pressure and is awaiting the results of a government investigation into its mistakes. The Office for National Statistics also does not have a permanent head, with National Statistician Ian Diamond resigning last month due to health reasons. The latest error is related to the overestimation of the number of vehicles subject to vehicle excise duty rates applicable in the first year of registration. Vehicle Excise Duty is a tax levied on each vehicle using public roads in the UK, adjusted based on its environmental impact. According to data from the Office for Budget Responsibility, it is estimated to raise over 9 billion ($12.2 billion) this fiscal year. The Office for National Statistics stated in a statement: "This will only lead to an overstatement of 0.1 percentage points in the year-on-year Consumer Prices Index (CPI) and Retail Prices Index (RPI) up to April 2025. Other periods are not affected. In light of this issue, we are reviewing the quality assurance processes of external data sources."