UK inflation rises to its highest level since January 2024 after
domestic bills spike
[May 21, 2025] By
PAN PYLAS
LONDON (AP) — Inflation in the U.K. spiked to its highest level for more
than a year in April amid a raft of higher domestic bills, such as
energy and water, official figures showed Wednesday.
The Office for National Statistics said that its key measure of
inflation, as measured by the consumer prices index, rose by 3.5% in the
year to April, up from 2.6% in March.
April's rate was the highest since January 2024 and above expectations
for a more modest increase to 3.3%.
The scale of the rise was also the largest since October 2022, at the
height of the energy crisis in the wake of Russia's full-scale invasion
of Ukraine.
Economists had anticipated a sizeable increase as April saw hefty annual
price rises for an array of household bills, as well as the impact of
higher taxes on businesses and a sizeable increase in the minimum wage.
Inflation is widely expected to stay above 3% for the rest of the year,
which could rein in expectations of further interest rate reductions
from the Bank of England, whose target for inflation is 2%.
On Tuesday, the bank's chief economist, Huw Pill, said that borrowing
rates have been cut too quickly, in a sign that he's concerned about
underlying inflation pressures.
Since it started cutting borrowing costs last August from the 16-year
high of 5.25%, the bank has proceeded on a gradual basis by lowering its
main interest rate by a quarter of a percentage point every three
months. Earlier this month, it reduced it to 4.25%.
Following the latest inflation update, Rob Wood, chief U.K. economist at
Pantheon Macroeconomics, said that cuts on a “precise quarterly
schedule” are “far from certain.”
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View of the Bank of England and the Royal Exchange from the Lookout
viewing point, in London, Wednesday, April 9, 2025. (AP
Photo/Alberto Pezzali, File)
 Even though inflation is expected to
run above the bank's target this year, economists expect it to fall
next year, partly because of the recent trade deal between the U.S.
and the U.K. which will mean many of the tariffs that U.S. President
Donald Trump had planned have been ditched.
Still, the sharp increase in inflation is a tricky moment for the
Labour Party government, which returned to power last July for the
first time in 14 years. In recent weeks, Labour touted what it
considers to be economic successes, including higher than
anticipated first-quarter growth and a trio of trade deals. As well
as the tariff pact with the U.S., the government has concluded a
trade deal with India and reset the United Kingdom's relationship
with the European Union after Brexit.
“I am disappointed with these figures, because I know cost of living
pressures are still weighing down on working people," Treasury chief
Rachel Reeves said.
The main opposition Conservative Party, which Labour replaced in
power, sought to pin the blame on Reeves' decision to increase the
tax burden on businesses.
“Families are paying the price for the Labour Chancellor’s choices,"
said Mel Stride, the Tories' economy spokesman.
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