London (AFP) – Britain’s annual inflation rate surged more than expected in April as energy and water bills rose sharply, official data showed Wednesday, causing the government to acknowledge that the country remained mired in a cost-of-living crisis. The Consumer Prices Index soared to 3.5 percent last month, up from 2.6 percent in March, the Office for National Statistics said in a statement. Analysts’ consensus forecast had been for a jump to 3.3 percent. At 3.5 percent, the headline rate was the highest since the beginning of 2024, the ONS noted.
“I am disappointed with these figures because I know cost-of-living pressures are still weighing down on working people,” finance minister Rachel Reeves said in a statement. Later addressing parliament, Prime Minister Keir Starmer acknowledged that the UK population remained ensnared in a “cost-of-living crisis,” adding that more pensioners could be made eligible for payments towards winter fuel bills. Faced with high government debt, Labour last year scrapped a winter-fuel benefit scheme for millions of pensioners, triggering an outcry by some of its own MPs.
“As the economy improves, we want to make sure people feel those improvements,” Starmer said on Wednesday. He added that while the government would “only make decisions we can afford,” he was willing to look at changes to the fuel policy later in the year. Kemi Badenoch, leader of the main opposition Conservatives, accused Starmer of a “U-turn” as the pair sparred during parliament’s weekly session reserved for MP questions directed at the prime minister.
Regarding utility-sector inflation, UK regulators allowed private companies to hike household bills from April, taking into account movements in oil and gas markets and indebted water providers. “Significant increases in household bills caused inflation to climb steeply,” ONS acting director general Grant Fitzner said in a statement. “Gas and electricity bills rose…compared with sharp falls at the same time last year.” He noted that “water and sewerage bills also rose strongly…as did vehicle excise duty, which all pushed the headline rate up to its highest level since the beginning of last year.”
Energy bills are expected to drop from July, however, following recent heavy falls to oil prices in the wake of US President Donald Trump’s tariffs blitz, according to analysts. Businesses were additionally hit in April by a tax hike and rise in the minimum wage, which both took effect last month after being introduced by the Labour government following its July election victory that ended 14 years of Conservative rule. Tory spokesman on the economy, Mel Stride, blamed “Labour’s economic mismanagement” for the surge to inflation. “Families are paying the price for the Labour…choices,” he added, as businesses pass on higher costs to consumers.
Analysts said the latest data could see the Bank of England ease the pace at which it has been cutting interest rates in recent months. “The BoE’s next move is far from straightforward,” noted Richard Flax, chief investment officer at wealth manager Moneyfarm. “The central bank is likely to remain cautious, potentially delaying rate cuts until there’s clearer evidence that inflationary momentum is genuinely easing.” The BoE earlier this month cut its key interest rate by a quarter point to 4.25 percent as the threat of US tariffs starts to weigh on economic growth. It followed three reductions spread over the previous eight months.
© 2024 AFP
