Inflation Data Error: What Happened?
The UK’s Office for National Statistics (ONS) has admitted it overstated April 2025’s inflation rate due to a data error tied to Vehicle Excise Duty (VED). The mistake—sourced from the Department for Transport (DfT)—led to the Consumer Prices Index (CPI) being reported at 3.5%, when the correct figure was 3.4%.
The issue stemmed from an overcount of vehicles subject to first-year VED rates. This pushed inflation figures slightly higher across the board, also inflating the Retail Prices Index (RPI) and the CPI including owner occupiers’ housing costs (CPIH) by 0.1 percentage points each.
How the Error Impacted the Markets
The inaccurate inflation reading triggered reactions in financial markets. Traders interpreted the 3.5% CPI as evidence of stickier inflation, leading to reduced expectations for near-term interest rate cuts by the Bank of England.
After the correction, the outlook softened slightly. But the damage to policy expectations and credibility had already been done. Even a 0.1 percentage point difference can move bond yields and affect investor decisions in a data-sensitive economy.
Related: How UK Inflation Trends Affect Interest Rates
ONS Response: No Revisions, But Changes Ahead
Despite acknowledging the mistake, the ONS confirmed it will not revise the published April inflation figure. Instead, corrected vehicle tax data will be used in the months that follow.
The agency is now reviewing its data quality control processes, particularly when working with figures sourced from other government departments. This follows growing scrutiny of the ONS for previous issues, including labor market data problems and delays in transitioning to updated data collection methods.
Sir Ian Diamond, the outgoing National Statistician, had already announced his departure prior to this incident. A broader review of the ONS’s internal practices is currently underway.
Related: What’s Next for the Office for National Statistics?
Bigger Picture: Trust in Official Data
Bank of England Governor Andrew Bailey emphasized the importance of trustworthy data in guiding monetary policy. With inflation still a central concern, even minor reporting errors can shift the economic narrative.
This episode reinforces how technical missteps can have real-world consequences—affecting financial markets, public trust, and policymaking at the highest levels.
Frequently Asked Questions (FAQ)
Why was UK inflation overstated in April 2025?
A miscount in Vehicle Excise Duty data, provided by the Department for Transport, caused the Office for National Statistics to overstate the Consumer Prices Index by 0.1 percentage points.
Will the April inflation figure be revised?
No. The ONS has stated that April’s figure will remain unchanged, but corrected data will be used for subsequent months.
What is the correct CPI for April 2025?
The accurate CPI is 3.4%. The original 3.5% figure was based on erroneous vehicle tax data.
Sources
- Financial Times – “ONS admits error in April UK inflation figure”
- Reuters – “UK car tax error overstated inflation by 10 basis points, ONS says”
- Business Standard – “Data error may have pushed up UK inflation, rate cut bets”
- The Times – “Faulty car tax data blamed for overstating April inflation figure”
