UK inflation hits 15-month high in April

UK inflation rose more than expected in April, hitting its highest level in nearly 15 months, driven by higher water charges and a range of other basic costs.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation hit 3.5% year-on-year (YoY) in April, compared to estimates of a 3.3% increase, and up from 2.6% in March.

Core inflation, which excludes volatile items such as food and energy, accelerated to 3.8% YoY in April, up from 3.4% in March.

Services inflation, closely monitored by the Bank of England (BOE) as a sign of price pressures, also grew to 5.4% in April, up from 4.7% a month earlier.

This implies that inflation is well above the BOE’s target of 2%, with the bank expecting the rate to increase further, peaking at 3.7% in September.

At the last BOE’s Monetary Policy Committee (MPC) meeting, held on May 8, the bank cut interest rates by 0.25% to 4.25%, while two committee members supported keeping rates unchanged.