Inflation in the United Kingdom climbed to its highest point in over a year this April, driven by a wave of rising domestic expenses, including energy and water bills, according to official data released Wednesday.
The Office for National Statistics reported that the Consumer Prices Index, its primary inflation gauge, rose by 3.5% in the year to April, up from 2.6% in March.
This marks the highest rate since January 2024 and surpassed forecasts, which had predicted a more modest increase to 3.3%. The scale of the rise was also the largest recorded since October 2022, during the peak of the energy crisis following Russia’s full-scale invasion of Ukraine.
Economists had expected a notable jump in inflation due to steep annual increases in a range of household bills in April, along with higher business taxes and a significant hike in the minimum wage.
Inflation is projected to remain above 3% throughout the rest of the year, potentially tempering hopes for further interest rate cuts from the Bank of England, which targets a 2% inflation rate.
On Tuesday, the Bank’s chief economist, Huw Pill, indicated that interest rates may have been lowered too quickly, reflecting concerns about persistent inflationary pressures.
Since beginning to reduce borrowing costs last August from a 16-year high of 5.25%, the Bank has made gradual cuts—lowering its main interest rate by 0.25 percentage points every three months. Earlier this month, it was reduced to 4.25%.
Commenting on the latest inflation figures, Rob Wood, chief UK economist at Pantheon Macroeconomics, said further rate cuts on a “precise quarterly schedule” now appear “far from certain.”
Although inflation is set to stay above the Bank’s target this year, economists expect it to decline in 2025, partly due to the recent U.S.-UK trade agreement, which scrapped many of the tariffs previously proposed by former U.S. President Donald Trump.
HKJ
