Fears of a spike in inflation were fuelled today as official figures showed the CPI rate doubled to a year-high of 1.5 per cent in April.
The headline index was slightly higher than economists had expected, and up from an annualised figure of 0.7 per cent in March.
The surge in the cost of living came as gas and electricity prices rose sharply, as the default tariff cap was increased recently compared with a cut a year earlier.
Clothes shops also increased their prices last month as non-essential retail reopened on April 12, while rising oil prices saw motor fuel inflation rise at its fastest pace for more than four years.
Although it is still below the Bank of England‘s 2 per cent target, concerns have been voiced that inflation will keep rising as the economy bounces back from the pandemic and high government spending feeds through.
The headline CPI was 1.5 per cent in April, slightly higher than economists had expected, and up from an annualised figure of 0.7 per cent in March
The Office for National Statistics said the rise was partly in comparison with sharp price falls seen at the same time in 2020.
Chief Economist Grant Fitzner said: ‘Inflation rose in April, mainly due to prices rising this year compared with the falls seen at the start of the pandemic this time last year.
‘This was seen most clearly in household utility bills and clothing prices.
‘As the price of crude oil continues to rise, this has fed through to the cost of motor fuels, which are now at their highest since January 2020.’
The Governor of the Bank of England said yesterday that he expects a spike in inflation ‘in the next month or so’ but any rise is only likely to be temporary.
Andrew Bailey told peers on the Economic Affairs Committee that the Bank’s forecast is for inflation to ‘pick up’ in the very near future as the economy bounces back as lockdown is eased.
But he said he does not see any evidence currently to suggest the increase will persist in the long term.
The Bank said in a report released earlier this month that it expects inflation to surge this year to 2.4 per cent in the final three months, largely due to energy prices.
But that spike will only be temporary and should return to around two per cent in the medium term.
Bank of England governor Andrew Bailey said yesterday that he expects a spike in inflation ‘in the next month or so’ but any rise is only likely to be temporary
