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The UK inflation rate climbed to 3.5% in April, marking its highest level since February of last year, according to data from the Office for National Statistics (ONS). This jump from 2.6% in March was largely driven by steep increases in energy and water bills.
Chancellor Rachel Reeves called the rise “disappointing” and pledged to take stronger action to ease the financial burden on households. In contrast, Conservative Shadow Chancellor Mel Stride criticized the government, claiming that families are “paying the price” for Labour’s economic decisions.
The Bank of England had previously projected inflation to peak at 3.7% between July and September before returning to its 2% target. It reaffirmed this outlook when it cut interest rates by 0.25% to 4.25% in early May, cautioning that inflation would likely rise before easing.
Nicholas Hyett, investment manager at the Wealth Club, noted that while rising energy and water costs were expected to impact inflation in April, the increases were more rapid than anticipated. Household service prices climbed 7% year-over-year, with water and sewerage bills surging by 26.1% in just one month.
Hyett remarked that this spike could present a challenge for the Bank of England, which recently lowered rates only to see inflation jump above the target. He highlighted concerns about elevated core inflation, which reflects domestically driven price pressures that are typically more responsive to monetary policy.
He concluded that the current scenario may tighten consumer finances and reduce the likelihood of further rate cuts in the near term—posing challenges for the government’s economic growth plans, despite recent signs of stronger GDP performance.
