UK inflation rose faster than expected last month, climbing to 3.5% in April—its highest level in more than a year—driven by a raft of household bill increases and cost pressures that analysts have dubbed “awful April”.
The latest figures from the Office for National Statistics (ONS) showed inflation rising from 2.6% in March, significantly outpacing the Bank of England’s 2% target and reaching levels not seen since January 2024. Analysts had forecast a more modest rise to 3.3%.
The data also revealed that core inflation, which strips out volatile items such as energy and food, rose to 3.8%, up from 3.4% the previous month. Meanwhile, services inflation, a key metric closely watched by the Bank of England, jumped from 4.7% to 5.7%, exceeding the Bank’s expectations of 5%.
The steep climb in inflation was largely driven by a broad rise in household bills. Energy regulator Ofgem raised the annual cap on energy bills by 6.4% to £1,849, while water and sewerage charges jumped by a staggering 26.1%—the highest increase since records began in 1988.
Council tax, broadband, mobile bills, and TV licence fees also saw seasonal hikes in April, contributing further to the upward pressure on prices.
“Significant increases in household bills caused inflation to climb steeply,” said Grant Fitzner, acting director general at the ONS. “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.”
Analysts also pointed to the impact of the government’s £25 billion rise in employers’ national insurance contributions and a 6.7% increase in the minimum wage, both of which came into effect in April.
“The persistence of inflation may be a bit stronger than previously thought, and businesses could be passing on more of the recent rises in taxes,” said Paul Dales, chief UK economist at Capital Economics.
Chancellor Rachel Reeves expressed disappointment with the figures, acknowledging that cost-of-living pressures remain high despite the drop from the double-digit inflation experienced under the previous administration.
“We are a long way from the double-digit inflation we saw, but I’m determined that we go further and faster to put more money in people’s pockets,” Reeves said.
UK inflation hit a 40-year high of 11.1% in October 2022, largely fuelled by soaring food and energy costs during the global supply chain crisis and Russia’s invasion of Ukraine.
The Bank of England had already warned of a short-term inflation spike, forecasting that the rate would remain at 3.5% through the summer. Despite this, investors still expect the central bank to make two further rate cuts this year, following the reductions in February and May, which brought the base rate down to 4.25% from its 16-year high of 5.25%.
Matt Swannell, economist at the EY Item Club, said the latest data presents a mixed picture for the Bank’s Monetary Policy Committee (MPC).
“Headline and services inflation overshot forecasts, but the MPC’s preferred measure of underlying services inflation actually cooled in April,” he noted. “On balance, we still expect rate cuts at alternate MPC meetings over the near term.”
Markets responded swiftly to the data. The pound rose by 0.5% against the dollar to hit a three-year high above $1.35, while yields on two-year gilts—which are sensitive to interest rate expectations—rose to 4.1%, their highest since early April.
As households continue to feel the squeeze, and policymakers weigh the implications, all eyes will be on the Bank of England’s next move—and whether this inflationary jolt marks a blip or a sign of stickier price pressures ahead.
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UK inflation surges to 3.5% in April as household bills climb in ‘awful April’
