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UK inflation rose greater than anticipated to three.5 per cent in April, underlining the Financial institution of England’s problem because it considers when to press forward with decreasing rates of interest.
Wednesday’s determine from the Workplace for Nationwide Statistics surpassed each the three.3 per cent predicted by analysts polled by Reuters and March’s 2.6 per cent.
The rise was pushed by greater power prices after regulators raised the family worth cap in addition to a bounce in water payments, the ONS mentioned. Stronger airfares additionally contributed.
Providers inflation, a key measure of underlying worth pressures for rate-setters, climbed to five.4 per cent in April, eclipsing analysts’ forecasts of 4.8 per cent and March’s determine of 4.7 per cent.
The BoE diminished charges by a quarter-point this month to their lowest stage since 2023 amid indicators of easing inflation.
However the Financial Coverage Committee was cut up over the choice. On Tuesday, chief economist Huw Tablet mentioned he feared the BoE was decreasing charges too quickly and that the momentum behind falling inflation was “stuttering”.
Chancellor Rachel Reeves’ enhance in employer nationwide insurance coverage contributions was additionally anticipated to stoke worth pressures.
However the BoE nonetheless expects inflation to subside late this yr after reaching 3.7 per cent in September, falling again to the central financial institution’s 2 per cent goal in 2027.
Following the discharge of April’s determine, the pound strengthened, up 0.4 per cent in opposition to the greenback at $1.344.
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