A recent jump in household bills has driven UK inflation to its highest level in over a year, according to newly released official figures.
In April, inflation rose to 3.5%, up from 2.6% in March. This increase was greater than many economists had predicted, signalling a setback in efforts to bring inflation down.
The surge was largely due to rising costs for essentials such as water, gas, and electricity. These price hikes came into effect on 1 April, along with several other bill increases, contributing to the overall rise in inflation.
As a result, inflation now stands significantly above the Bank of England’s 2% target, raising questions about the outlook for interest rates.
While earlier forecasts suggested there could be two interest rate cuts this year, some analysts now believe that only one is likely, due to the latest inflation figures.
Inflation was forecast to rise by 3.3% in the year leading up to April. However, actual figures have come in slightly higher than anticipated.
The Bank of England has stated that it expects inflation to reach a peak of 3.7% between July and September 2025, before gradually easing off.
One of the Bank’s main responsibilities is to maintain inflation at its target level of 2%. It does this by adjusting interest rates—either increasing or cutting them—to help keep inflation under control.
The general principle is that higher interest rates make borrowing more expensive, which can discourage spending. At the same time, it can encourage people to save rather than spend.
By reducing spending and demand, the pressure on prices can ease, helping to slow down inflation.
Earlier this week, Huw Pill, the Bank of England’s chief economist and a member of the committee responsible for setting interest rates, expressed concern that rates might be coming down too quickly. He warned that the recent progress in reducing inflation appears to be “stuttering”.
Water and sewerage bills increased by a staggering 26.1% in April, marking the steepest rise in 37 years, according to figures from the Office for National Statistics (ONS). This is the highest jump recorded since official records began.
A notable surge in airfares compared to the same time last year also played a significant role in pushing inflation higher. The timing of Easter, which fell later this year, is believed to have contributed to the spike in flight prices and package holidays. This rise is likely to be a temporary effect.
In addition, the cost of services climbed by 5.4% in the year leading up to April. Economists have pointed to the recent increase in National Insurance Contributions for employers and the introduction of a higher minimum wage as key drivers behind this rise. These changes have added pressure on businesses, forcing many to raise prices.
Services inflation refers to the rise in costs for day-to-day experiences such as dining out, haircuts, or entertainment like going to the cinema.
The UK has a services-driven economy, which means a large portion of the country’s employment and economic activity is based on providing services rather than manufacturing goods.
Core inflation, which excludes more volatile items such as energy and food prices, also rose by more than many had anticipated. This measure is often used to assess the underlying trend in price rises.
Chancellor Rachel Reeves expressed her disappointment over the latest figures. However, she highlighted that the recent increase in the minimum wage and the continued freeze on fuel duty are intended to ease the pressure on household budgets.
In response, Shadow Chancellor Mel Stride described the rise in inflation as troubling for families. He criticised the current government’s economic strategy, claiming, “We left Labour with inflation bang on target, but Labour’s economic mismanagement is pushing up the cost of living for families.”
‘Supermarket shop is getting more and more expensive’
Tracy McGuigan-Haigh, 47, lives in Dewsbury with her 11-year-old daughter, Ruby. She works in retail and balances her job around caring for her daughter. To make ends meet, she receives Universal Credit alongside her wages.
Despite careful budgeting, Tracy says her income simply isn’t going far enough each month. She’s particularly noticed how the cost of food has risen dramatically. “Even on a budget, the supermarket shop is getting more and more expensive,” she explains. “I’m not coming out with a lot in my arms.”
She reflects on how things used to be. “Before, £40 would fill a trolley. Now, that same amount doesn’t even fill a basket – it’s barely a handful.”
The soaring cost of daily essentials is taking its toll. Tracy admits it’s becoming overwhelming. She feels that talk of falling interest rates offers little hope for people in her position.
“It’s gone too far,” she says. “I’ve juggled so much that I’ve dropped balls, and someone’s saying ‘it’ll get better’. But even if things improve, what about the people already at rock bottom? Where’s the support for them?”
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