Inflation rose to 3.5% in April – its highest rate since January 2024 – after a sharp jump in household bills and taxes. The increase, reported by the Office for National Statistics (ONS), was higher than expected by both financial markets and the Bank of England.
City economists had forecast a 3.3% rise, while the Bank anticipated 3.4%. The reality was worse, largely due to higher costs for gas, electricity, water, and public transport. Water bills, vehicle excise duty, and council tax all saw significant increases, prompting some commentators to label it “awful April”.
The rise in the national minimum wage and employer National Insurance contributions also added to cost pressures for businesses, some of which passed those costs onto consumers through price increases.
The inflation surge comes after months of gradual decline, with the consumer prices index sitting at 2.6% in March. Despite falling oil prices – which helped bring down petrol and diesel costs – and seasonal discounts on children’s clothes and women’s footwear, overall price growth still outpaced expectations.
This unexpected spike is likely to delay interest rate cuts. The Bank of England had been expected to lower its base rate from 4.25% to 4% this summer, but analysts now expect the earliest reduction to come in September. Upcoming meetings of the Monetary Policy Committee in June and August are no longer seen as likely opportunities for cuts, as policymakers wait for more consistent signs of inflation easing.
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