Inflation doubles

 

A surge in oil prices and a rise in household gas and electricity bills pushed UK inflation to 1.5% in April, its highest level since the start of the coronavirus pandemic in March 2020, according to official figures. An increase in the cost of clothing and footwear also played a part in the jump from 0.7% in the previous month as the government eased restrictions and more retailers opened on the high street. The rate of inflation remains below the Bank of England target of 2% and most price increases relate to a turnaround from falls last year rather than more recent price pressures, but the latest figures will fuel concerns that the cost of living is on a rising trend. Crude oil prices have tripled over the past year after dropping to almost $20 (£14.08) a barrel last April. Some of this rise has passed through to the pumps, the Office for National Statistics said, taking the average price of petrol in April to 125.5p a litre, up 1.8p on the previous month. The ONS said the lifting of the price cap on gas and electricity prices had also increased household utility bills. The Bank of England governor, Andrew Bailey, said on Tuesday that the central bank was sticking by its forecast that inflation would remain only slightly above target over the next year – as the economy recovered – before falling back in 2022. Some analysts have voiced fears that inflation will escalate as consumers spend an estimated £150bn of savings accumulated over the last 14 months. They are concerned central bank policymakers will respond by increasing interest rates to limit the spending spree with the effect that more firms will go bust and unemployment will grow. However, the Bank of England has argued that spending is likely to be more modest, putting less pressure on prices.

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