UK inflation surges to 3.5% in April amid energy bill hikes

UK inflation accelerated to 3.5% in April, marking its highest level in over a year, as millions of households faced sharp rises in energy and utility bills, according to official figures released today by the Office for National Statistics (ONS).

The rise from 2.6% in March was driven largely by a rare springtime hike in energy prices, with households on the energy price cap seeing their bills jump by 6.4%. Council tax and water charges also rose sharply at the start of the month, with typical increases around 5%.

The ONS said the increases in housing and household services were the main contributors to the inflation surge, alongside upward pressure from transport, and recreation and culture. The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.1% in the 12 months to April, up from 3.4% in March. Core inflation measures also ticked higher, pointing to broad-based price pressures across both goods and services.

Mike Randall, CEO of Simply Asset Finance, said that while rising inflation is always a concern, many businesses were prepared for it.

“An increase in headline inflation will always cause concern – but for UK businesses, it’s been anticipated for some time now,” said Randall.

“The positive activity we’ve seen in the first quarter shows that most businesses have now factored in the cost increases announced in last Autumn’s budget. What’s lacking, however, is clarity on what’s next.

“SMEs aren’t asking for more policy announcements – they need execution. And top of the list is the Government’s long-awaited industrial strategy, which is a vital opportunity to move from intent to impact. Potential can’t grow in a vacuum, and SMEs now need clarity on future infrastructure investment priorities, and access to finance if we are to build sustainable, long-term growth.”

With inflation now well above the Bank of England’s 2% target, attention is turning to how monetary policymakers will respond. While there have been hopes of interest rate cuts later this year, the latest data may prompt the Bank to take a more cautious approach.

The next inflation report is due in June, with markets and businesses alike watching closely to see whether April’s sharp rise is the beginning of a renewed upward trend or a temporary spike amid ongoing cost-of-living pressures.