Inflation across the UK has risen to its highest level in over a year, more than doubling last month as higher petrol prices and gas and electricity bills pushed up the cost of living.
The Consumer Prices index rose by 1.5% in the 12 months to April 2021, new figures from the Office for National Statistics show.
ING Developed Markets Economist James Smith said: “Like just about every country, the UK’s inflation rate jumped in April on pandemic-related base effects. The increase in headline CPI to 1.5% from 0.7% is predominantly because we’re now comparing prices to the depth of the Covid-19 crisis last year, while energy prices also received a lift last month when the regulator lifted the household electricity/gas cap by 9%.
All of this, of course, has been well telegraphed, as is the anticipated rise in inflation above target later this year. We expect inflation to edge higher again next month, and reach 2% for the first time over the summer, before remaining there through the fourth quarter and first quarter of next year.
“Ultimately though, what matters for the Bank of England is what happens to inflation in 2022 and beyond, and there aren’t many clues in this latest data. But at this stage we think headline CPI will most likely dip back below target from around April next year. Much will depend on wage pressures, which despite the green shoots appearing in the jobs market, we think will most likely be fairly benign (though with signs of skill shortages in certain sectors emerging, this is likely to vary between industries).”