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BBC News
21-05-2025
- Business
- BBC News
UK inflation may not fall as fast as expected
The sun may have shone, but April was dubbed "awful" for a reason. Higher energy bills were followed by the biggest rise in water bills for over 35 years. Add in the continued rises in prices of food and services, a spike in airfares, and you get not only the highest inflation in a year but a situation where prices are rising faster than in France or good news is that, for more workers, pay rises are still outpacing the rate at which prices are rising. That means their money, on the whole, is stretching further. What's more, inflation remains a lot lower than it was - that peak of 11% in late 2022 - and should stay that way. But the rise today is not about to be immediately reversed rise in gas and electricity bills was propelled by higher wholesale global costs – the same factors that triggered the cost of living crisis a few years ago. Those wholesale costs are falling. But, due to the way our bills are set, it will take a while for that to mean lower prices for for services inflation, part of the reason it rose in April was a spike in airfares because of the late Easter holidays this year. That distorted the figures and will be reversed. And the rise in vehicle excise duty was also a price pressures in other services – such as restaurant meals – remain higher than the Bank of England would like to see. And some economists worry that rises in those kind of areas suggest that bosses are passing on National insurance Contributions and other wage cost increases. That could continue. The government's own policies risk adding to those kind of factors that prompt economists to think that inflation could inch up further over the next few months, although they think it will remain below 4%. And won't fall back until 3% until next year. It is why some don't expect the Bank of England to cut the interest rates more than one more time this year – which may come as a disappointment for the hundreds of thousands of homeowners looking to remortgage over the next there are also some factors that could help bring inflation down. US President Donald Trump's trade war has led to expectations of weaker global growth and so brought down the price of oil and many other commodities on world markets. That should bring petrol down further – and help curb increases in food bills, as could the deal struck wit the EU this week. And the continued uncertainty over the President's ultimate trade policy could yet see more cheap imports from the likes of China imported ever, inflation is an uncertain the Chancellor acknowledges, it is painful for households – particularly those whose incomes aren't keeping up. But the outlook could be far gloomier.
Asharq Al-Awsat
21-05-2025
- Business
- Asharq Al-Awsat
UK Inflation Hits 15-month High as Utility Bills Soar
Britain's annual inflation rate surged more than expected in April as energy and water bills rose sharply, official data showed on Wednesday. The Consumer Prices Index soared to 3.5 percent last month, up from 2.6 percent in March, the Office for National Statistics said in a statement. Analysts' consensus forecast had been for a jump to 3.3 percent, AFP reported. At 3.5 percent, the headline rate was the highest since the beginning of 2024, the ONS noted. "I am disappointed with these figures because I know cost of living pressures are still weighing down on working people," finance minister Rachel Reeves said in a statement. UK regulators allowed private companies to hike household bills from April, taking into account movements in oil and gas markets and indebted water providers. "Significant increases in household bills caused inflation to climb steeply," ONS acting director general, Grant Fitzner, said in a statement. "Gas and electricity bills rose... compared with sharp falls at the same time last year." He noted that "water and sewerage bills also rose strongly... as did vehicle excise duty, which all pushed the headline rate up to its highest level since the beginning of last year". Energy bills are expected to drop from July, however, following recent heavy falls to oil prices in the wake of US President Donald Trump's tariffs blitz, according to analysts.
The Guardian
21-05-2025
- Business
- The Guardian
Bigger-than-expected inflation jump worsens Bank of England dilemma
For households across Britain, April was an awful month. Rising energy bills, broadband costs and the sharpest increase in water bills since privatisation – despite public anger over the quality of service offered – all added to the cost of living squeeze. Economists had forecast a jump in inflation based on the flurry of annual bill increases. But at 3.5% – the highest rate in the G7 – the rise was bigger than the 3.5% rate predicted in the City, and will raise concerns at the Bank of England. Most of the increase was down to energy costs, after a well-telegraphed 6.4% increase in the Ofgem consumer price cap. However, there was a much bigger leap in water and sewerage bills, where prices rose by a whopping 26.1% – the biggest annual increase since February 1988. Although inflation had been cooling for several months, it was clear a jump in the headline rate would come as a consequence of the changes in utility bills, as well as a number of other price increases timed to land in April each year. Inflation has been close to the 2% target since the middle of last year, having fallen back from a peak of more than 11% in late 2022 after the Russian invasion of Ukraine sent energy prices soaring. Now it is on the rise again, and Threadneedle Street forecasts it will peak at an average of 3.5% over the summer months and does not expect it to return to its 2% target until early 2027. Usually inflation sticking above the Bank's target for so long would entirely rule out interest rate cuts. However, at 4.25%, official borrowing costs are squeezing businesses and households at a time when there are concerns over economic growth given heightened uncertainty as Donald Trump's trade wars rattle the global economy. In this world, policymakers are attempting to strike a balance between bearing down on inflation, while supporting activity in the economy. Given the higher-than-expected inflationary burst in April, there are concerns that the Bank will not be able to reduce borrowing costs by as much as hoped, even as economic uncertainty remains elevated. There are, however, some signs that the rise in inflation should prove temporary. Business leaders have been warning about the impact of the government's £25bn increase in employer national insurance contributions (NICs) – introduced last month – being passed on to consumers in the form of higher prices. Economists say there was some evidence in the April data, after services inflation – which is more sensitive to labour costs – sharply strengthened on the month, from 4.7% to 5.4%. To many business groups this was a clear sign of costs being passed on. However, the picture is not entirely clear. Much of the overshoot was driven by the timing of Easter. The Office for National Statistics highlighted that it gathered its data for consumer prices during this year's Easter holidays, when travel and tourism companies sharply increase prices. Because it gathered last year's data outside the long bank holiday weekend, the inflation rate – which measures the change in price from a year earlier – is unflatteringly high. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Air fares increased by 27.5% when compared with those in March, the second-biggest month-on-month increase on record, while prices for recreation and culture, particularly foreign holidays, also rose sharply. In contrast, the rate of inflation for restaurants and hotels – a sector particularly exposed to higher labour costs – cooled on the month. Still, other economists point to food inflation, which is also likely to be influenced by the NICs increase, where price growth increased from 2.9% to 3.2%. Where the tax increase is having a more noticeable impact, however, is in terms of hiring, after figures published earlier this month showed unemployment hitting the highest level in almost four years. That ought to concern Threadneedle Street's policymakers for the months ahead.
Yahoo
21-05-2025
- Business
- Yahoo
Inflation surges to 3.5% due to April bill shock
The pace of inflation surged last month to an annual rate of 3.5%, its highest level in more than a year, according to official figures which blame hikes to essential household bills. The Office for National Statistics (ONS) said the increase, up from a 2.6% rate in March, was explained by an unusual increase to energy bills during April and steeper rises for other staples such as council tax and water. Households on the energy price cap saw a rare spring rise of 6.4% in April while council tax bills were widely up by the 5% level. Money latest: The water regulator allowed suppliers to charge customers an extra £10 per month, on average, across England and Wales while broadband, mobile and TV licence costs also rose. The consumer prices index measure of inflation is closely-watched as rising numbers make it difficult for the Bank of England to cut interest rates - raised sharply by the Bank from December 2021 to tackle the infancy of the cost of living crisis. There have been four cuts since August last year, as easing inflation has allowed. In advance of the ONS data, financial markets had fully priced in two further interest rate reductions this year, with no change expected at the Bank's next rate-setting meeting in mid-June. The inflation numbers also make for tough reading at the Treasury, where Chancellor Rachel Reeves is juggling several challenges. While the recent economic growth figures have been encouraging, economists widely expect hikes to consumer bills to apply a further choke to consumer spending in the months ahead. This breaking news story is being updated and more details will be published shortly. Please refresh the page for the fullest version. You can receive Breaking News alerts on a smartphone or tablet via the Sky News App. You can also follow @SkyNews on X or subscribe to our YouTube channel to keep up with the latest news.
The Sun
21-05-2025
- Business
- The Sun
UK inflation RISES after millions hit with huge bill hikes – what it means for YOUR money
THE UK's rate of inflation jumped to its highest level in over a year last month. The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measured 3.5% in the 12 months to April. 1 The ONS explained that the rise, from 2.6% in March, was due to a sharp increase in energy bills in April, along with higher costs for essentials like council tax and water.
