UK inflation unexpectedly rose to 3.5% in April, reaching its highest level in over a year, as households were hit by rising costs for energy, water, and council tax.
The surge in the consumer prices index (CPI), reported by the Office for National Statistics (ONS), follows a fall to 2.6% in March and has triggered concerns about delays to interest rate cuts.
April’s rise was driven primarily by increases in gas and electricity prices, which jumped after changes to the Ofgem energy price cap.
Water and sewerage bills saw their steepest increase since privatisation, rising by 26.1%. Vehicle excise duty and transport-related costs also rose, contributing to the overall spike.
Dubbed by many as a financially challenging month, April saw a combination of cost pressures that impacted both households and businesses.
A rise in the national minimum wage, alongside higher employer national insurance contributions, added to the strain on businesses, many of which are now expected to pass on costs to consumers.
The Bank of England had forecast inflation to hit 3.4% in April, while City economists predicted a slightly lower rise of 3.3%.
The stronger-than-expected figure may now lead the Bank to hold off on immediate interest rate cuts, with financial markets pushing back expectations for any change until September.
Economists suggest inflation could remain elevated in the coming months, largely due to regulated price hikes and rising business overheads.
Although lower oil prices helped ease petrol and diesel costs, and retailers offered discounts on children’s clothing and women’s footwear, these savings were not enough to offset other increases.
Business groups voiced disappointment over the likely delay in rate cuts. Many small and medium-sized enterprises are facing increased operational costs, with research showing over half planning to raise prices to cope with ongoing financial pressures.
Looking ahead, falling energy price forecasts may offer some relief, potentially easing inflation later in the year. However, for now, households and businesses across the UK are bracing for continued economic challenges amid the persistent cost of living crisis.
