According to the report from the Office for National Statistics (ONS), consumer prices rose by 3.5% per year in April after an increase of 2.6% per year in March. This was the strongest growth since January 2024. Economists had expected CPI growth of 3.3% per annum. On a monthly basis, the consumer price index rose 1.2%, accelerating compared to March (+0.3%) and reaching its highest level since April 2023. Consensus estimates suggested a 1.1% increase.
The ONS said that the largest upward contributions to the CPI annual rates came from housing and household services, transport, and recreation and culture. The largest, partially offsetting, downward contribution came from clothing and footwear.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - accelerated to 3.8% per year (the highest reading since April 2024) from 3.4% per year in March. Consensus estimates suggested an increase by 3.6% per annum. The annual CPI goods rate jumped (1.7% vs 0.6% in March), and the CPI services rate also accelerated (5.4% vs 4.7%).
On a monthly basis, core consumer prices rose 1.4% after increasing by 0.5% in March. Economists had expected growth of 1.2%.
The Bank of England (BoE) forecast inflation to peak at 3.5% this year, but some officials doubt the assumption that rising inflation won’t impact pricing behavior long-term. Chief Economist Huw Pill argued Tuesday that interest rate cuts were too rapid given persistent wage pressures, though his vote to maintain rates may be temporary. Interest rate futures suggest an 85% chance rates will stay unchanged next month, with less than two 0.25% cuts expected by year-end. On May 8, the BoE cut rates to 4.25% in a split decision, with two members favoring a larger cut and two, including Pill, preferring no change.