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UK Inflation Rises to 3.5% in April as Household Bills Surge, Surpassing Expectations

UK Inflation Rises to 3.5% in April as Household Bills Surge, Surpassing Expectations

21 tháng 5 2025

UK inflation climbed to 3.5% in April 2025, driven by soaring energy and utility costs, raising questions for the Bank of England’s interest rate path.

Inflation Jumps to 3.5%, Ending Recent Cooling Trend

The U.K.’s annual consumer price index (CPI) rose to 3.5% in April 2025, exceeding analyst forecasts and breaking a two-month trend of slowing inflation, according to data released by the Office for National Statistics (ONS) on Wednesday.

Economists polled by Reuters had anticipated a CPI increase of 3.3%. April’s figure marks a reversal after CPI dropped to 2.8% in February and 2.6% in March.

The spike raises fresh concerns over the cost of living crisis that continues to affect millions of British households.

Core Inflation and Energy Costs Drive Increase

Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, also rose — hitting 3.8%, up from 3.4% in March.

The ONS attributed the largest upward contributions to:

Housing and household services

Transport

Recreation and culture

Meanwhile, clothing and footwear contributed to a minor offsetting downward effect.

One of the most striking statistics:

Water and sewerage charges spiked 26.1% in April alone — the highest monthly rise since February 1988

Electricity, gas, and fuel prices climbed 6.7% over the year

Government and Market Reaction

British Chancellor Rachel Reeves responded by saying she was “disappointed” with the latest numbers, noting that cost of living pressures continue to weigh on working families.

Economists had largely predicted the rise, pointing to:

A sharp increase in the energy price cap

One-off effects from domestic business tax hikes

Easter holidays and seasonal weather patterns

Still, the report is a setback for the Labour government, which has made easing inflation and cost pressures a top priority.

Impact on the Bank of England’s Rate Outlook

The inflation surprise complicates the path forward for the Bank of England (BOE), which cut its base interest rate to 4.25% earlier this month in a bid to support growth.

However, with two members of the BOE’s Monetary Policy Committee (MPC) having voted to hold rates steady, the new data may reinforce hawkish concerns.

“Higher core inflation will be particularly concerning,” said Nicholas Hyett, investment manager at Wealth Club.
“It’s the type of inflation the Bank can more directly influence.”

The BOE had previously signaled it expected temporary inflationary pressure to lift CPI to around 3.7% in Q3, largely due to regulated price hikes. Even so, the central bank emphasized that future rate cuts would be “gradual and careful.”

Broader Economic Context: Growth vs. Inflation

The inflation report comes just days after the UK posted an unexpectedly strong GDP growth of 0.7% in Q1, providing a brief economic boost.

However, economists caution that this performance was likely front-loaded:

Some business activity was accelerated ahead of U.S. tariff changes

April’s business tax increases likely pulled forward economic activity

“It’s a noisy period for the BOE,” said Julien Lafargue, Chief Market Strategist at Barclays Private Bank.
“But the broader trend still points to disinflation. This should allow the Bank room for at least two more rate cuts this year.”

Final Thoughts

While April’s inflation data may raise eyebrows, especially within the BOE and among policymakers, many analysts still view the longer-term trend as moving toward price stability.

For now, however, the pressure remains high for UK households — and for the central bank’s delicate balancing act between supporting growth and controlling inflation.

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