UK Inflation Hits Highest Point Since January 2024 Due to Increasing Living Expenses

The United Kingdom experienced a sharper-than-expected rise in annual inflation in April, with the rate climbing to 3.5%, up from 2.6% in March. This marks the highest reading since January 2024 and reflects growing cost-of-living pressures, according to the Office for National Statistics (ONS).

Inflation Exceeds Forecasts:

A Reuters poll of economists had projected inflation to reach 3.3%.The Bank of England (BoE) had forecasted a 3.4% rate for April, making the actual figure notably above both market and central bank expectations.

Key Drivers Behind the Increase:

Energy price cap raised by 6.4% in April by the Office of Gas and Electricity Markets (Ofgem), reversing a previous annual decline.

Broader increases in household bills, including:

Water chargesCouncil taxMobile phone feesOther service-related costsThese cumulative rises have contributed to heightened financial strain for British households.

Market Implications:

The stronger inflation data may dampen expectations for multiple interest rate cuts by the BoE before the end of 2025.Earlier this month, the central bank had already reduced interest rates by 25 basis points to 4.25%, but persistent inflation may delay or limit further easing.

April’s inflation report underscores the enduring inflationary pressures in the UK economy. With inflation now approaching the BoE’s projected peak for 2025, monetary policymakers are likely to adopt a more cautious stance in upcoming decisions. The elevated cost of living remains a central concern, and market participants will closely watch how the central bank navigates these economic headwinds in the months ahead.