Inflation in British rose more than anticipated in April even in regions closely monitored by the Bank of England, with numbers released Wednesday set to keep the central bank on its course of slow interest rate reductions.
The consumer prices annual rate of growth surged to 3.5% in April from 2.6% in March, the Office for National Statistics reported, the highest reading since January 2024 and the biggest rise in the rate since 2022 when inflation was soaring.
A Reuters survey of economists had indicated a reading of 3.3% in April while the Bank of England previously this month forecasted inflation at 3.4%.
The figures will also likely lead financial markets to expect no more than one interest rate cut by the end of 2025.
Services price inflation – one of the most important gauges of domestic inflation pressure – surged to 5.4% in April, higher than all projections in the Reuters survey of an advance to 4.8%. It was well ahead of the BoE forecast a reading of 5.0% for April.
The ONS added that the fact that the Easter break occurred in April this year was likely to have been a factor behind the dramatic rise in air fares which rocketed by 27.5% on the previous month, the second-largest month-on-month rise ever recorded.
Rising gas, electricity, and water prices in April, along with higher employers’ taxes, will drive up costs.
Earlier this month the BoE forecast that inflation would peak at 3.5% this year. Some central bank officials criticize its central assumption that the rise in inflation will not have longer-lasting impacts on price behaviour.
