UK inflation down, prices dash June rate cut hopes

STORY: UK inflation fell by less than expected in April.

Consumer prices rose by an annual 2.3% - down sharply from a 3.2% rise the month before.

It was also the lowest since July three years ago, according to official data released Wednesday.

But both the UK's central bank and economists had forecast a bigger drop to 2.1%.

Services inflation was much higher than expected, while petrol prices also rose.

One investor said core inflation, which takes out energy, food and tobacco, came in stronger than expected.

Sterling jumped after the data was released.

Wednesday's update also led investors to cut their bets on a Bank of England rate cut next month.

Market watchers priced the chance of a cut in June at just 18% - way down from 50% a day before.

Recent labor market data has brought mixed news on the price pressures front.

Private sector wage growth, excluding bonuses, eased only marginally in the three months to March.

The central bank is concerned rapid wage growth could sustain inflationary heat across the economy.