Consumption bills push UK inflation rates to greater-than-expected levels in April, the highest since January 2024.

Inflation in the UK rose by more than anticipated last month to 3.5%, its highest in over a year, followed by exponential increase in water and gas bills, energy costs, and council tax. 

All bills combined pushed Britain’s inflation up, above the Bank of England’s target of 2%. The inflation rate in March was 2.6%, expected to rise to a maximum of 3.3% in April. Water and wastewater bills saw the largest spike of 26.1%, which the ONS said was the largest rise for 37 years, since official records began. This was followed by airfares rise of 16.2%, which is expected to be a one-off increase due to a later Easter this year.

The surge in the consumer prices index (CPI) recorded by the Office for National Statistics came after a decline in the rate over the first quarter of the year to 2.6% in March. This unforeseen increase has led economists and investors to be apprehensive of the two interest rate cuts expected this year. Some allege this number would reduce to only one cut. The chance of a BoE rate cut in August was cut to 40% by investors, down from 60% before the inflation data.

Monica George Michail, an economist at the National Institute of Economic and Social Research, stated that the inflation rates were likely to remain high for several months, forcing the central bank to delay interest rate rises. “Businesses are experiencing cost pressures amid 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,” she said. “We therefore anticipate just one further interest rate cut this year by the Bank of England.”

One of BoE’s main targets is to keep the nation’s inflation at bay – and adjust interest rates accordingly. If borrowing becomes expensive, people would have less spending capacity and incline towards greater savings. This in turn reduces the pace of price rise of goods since demand tends to fall with spending. However, Huw Pill, chief economist at the Bank of England, voiced his concerns saying that the central bank was reducing interest rates too fast and that the momentum behind falling inflation was “stuttering”.

Services price inflation – a key indicator of domestic inflation pressure – spiked to 5.4% in annual terms in April, far above the BoE’s prediction of a reading of 5.0% for April. All such rises in household bills have led to the month being dubbed as “Awful April”.

The April figures have put the UK at one of the top spots among the highest inflation economies of any major Western European economy, behind only the Netherlands. Finance minister Rachel Reeves expressed her disappointment. 

“We are a 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,” she stated. She also mentioned that April’s minimum wage rise and the decision to freeze fuel duty would help people with cost of living pressures.

Mel Stride, the shadow chancellor said, “This morning’s news that inflation is up – and now well above the 2% target – is worrying for families.”

“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.”