UK inflation jumped to 3.5% in April, marking the highest level in over a year, according to the Office for National Statistics (ONS). The sharp increase was driven by rising household bills, energy costs, transport charges, and wage-related pressures. This surprise surge has raised concerns for the Bank of England as it complicates future decisions on interest rates.
The consumer prices index (CPI) exceeded expectations from both City economists and the Bank of England, which had forecast 3.3% and 3.4% respectively. This rise follows a recent dip to 2.6% in March and has been partly blamed on what experts call an “awful April” of soaring gas, electricity, and water bills. Water and sewerage charges alone soared by 26.1%, the highest since privatisation.
Economist Monica George Michail warned that inflation may remain high for several more months. She explained that rising wages, increased national insurance, and regulated prices are likely to push more costs onto consumers. As a result, the Bank of England may delay any further interest rate cuts until later this year.
In response, financial markets have shifted expectations, now predicting the next interest rate cut to come in September rather than the previously expected dates of June or August. The rate, currently at 4.25%, is projected to fall slightly to 4%. Falling oil prices and clothing discounts have helped ease the pressure, but the overall outlook remains uncertain.
Meanwhile, the inflation figures have sparked fresh political debate within the Labour government. A leaked memo revealed internal divisions over how to handle the economy, with Deputy Prime Minister Angela Rayner’s office pushing for tax hikes that Chancellor Rachel Reeves ultimately rejected. Instead, Reeves opted for welfare cuts, which have drawn criticism from both within the party and opposition leaders.
These inflation numbers not only raise economic concerns but also intensify the political challenges for the Labour government. As the Bank of England navigates its next moves, it must balance growing cost-of-living pressures, fiscal policy debates, and the need to control inflation without stalling economic recovery.