UK (Parliament Politics Magazine) – UK inflation jumped to 3.5% in April, which was above forecasts, driven by rising household bills and wage pressures, delaying expected interest rate cuts.
As reported by The Guardian, Office for National Statistics data shows inflation in the UK hit 3.5% last month, fuelled by surging household costs including energy, water rates, and council tax.
What did the ONS say about the 3.5% inflation rise?
According to the ONS, inflation rose due to a rare hike in energy bills, coupled with steeper costs for essentials such as council tax and water, compared to March’s 2.6%.
Energy bills under the price cap surged 6.4% in April, as council tax rose by 5% across the board, signalling a steep rise in household costs.
What did Grant Fitzner say about the sharp rise in inflation?
ONS acting director general, Grant Fitzner, said,
“Significant increases in household bills caused inflation to climb steeply. Gas and electricity bills rose this month compared with sharp falls at the same time last year due to changes to the Ofgem energy price cap.”
He added,
“Water and sewerage bills also rose strongly this year as did vehicle excise duty, which all pushed the headline rate up to its highest level since the beginning of last year. This was partially offset by falling prices for motor fuels and clothing, driven by heavy discounting for children’s garments and women’s footwear.”
What did Monica George Michail say about inflation and interest rates?
Monica George Michail, an economist with the National Institute of Economic and Social Research, stated inflation is expected to remain high over the next several months, which may cause the central bank to postpone further interest rate hikes.
She said,
“Businesses are experiencing cost pressures amidst the rise in national minimum/living wage, employer’s national insurance contributions, and regulated price increases. Some of these costs will be passed down to consumers through higher prices.”
Ms Michail added,
“We therefore anticipate just one further interest rate cut this year by the Bank of England.”
What did the Chancellor Rachel Reeves say about inflation and cost-of-living pressures?
Rachel Reeves said,
“I am disappointed with these figures because I know cost of living pressures are still weighing down on working people.”
She stated,
“We are long way from the double digit inflation we saw under the previous administration, but I’m determined that we go further and faster to put more money in people’s pockets.”
Ms Reeves added,
“That’s why we have increased the minimum wage for millions of working people, frozen fuel duty to protect commuters and struck three trade deals in the past two weeks that will go towards cutting bills.”
What did Mel Stride say about rising inflation and its impact on families?
The shadow chancellor, Mel Stride, stated,
“This morning’s news that inflation is up – and now well above the 2% target – is worrying for families.”
He added,
“Labour’s economic mismanagement is pushing up the cost of living for families – on top of the £3,500 hit to households from the chancellor’s damaging jobs tax. Higher inflation could also mean interest rates stay higher for longer, hitting family finances hard … Families are paying the price for the Labour chancellor’s choices.”
What did business groups say about delayed interest rate cuts and rising costs?
Representatives from business organizations raised concerns about the expected delay in interest rate cuts.
According to the British Chambers of Commerce, rising costs and higher bills for households have placed businesses under severe strain.
The group stated,
“While April’s jump was expected, the scale, to 3.5%, is concerning. With the national insurance hike, minimum wage rise and global tariffs, our research shows 55% of businesses are expecting to put up prices in the coming months.”
Bank of England’s prediction about inflation
Earlier this month, the Bank of England announced that inflation is expected to remain near 3.5% during the summer and autumn seasons.
The central bank cut interest rates by 0.25 points to 4.25% at the May meeting. The nine-member monetary policy committee showed division. Two members wanted to keep rates steady, while another two called for a half-point reduction.
How is inflation measured?
- Inflation is monitored by tracking changes in the costs of a basket of goods and services over time.
- Common measures include the Consumer Price Index and the Producer Price Index.
- CPI reflects prices paid by consumers for everyday items.
- PPI measures prices from the perspective of producers or wholesalers.
- The inflation rate is calculated as the percentage change in these indexes over a period.