Prices increased at a rate of 3.5% in the year to April, according to the Government’s Consumer Prices Index (CPI). The last time it was higher than this was July 2024.
An increase in inflation was widely expected due to increases to many household bills including water, council tax and broadband, although price rises in these areas were offset by falls in the price of clothing and fuel.
However, 3.5% came in ahead of many economist forecasts.
Danni Hewson, head of financial analysis at DIY investment group AJ Bell, said: “Everyone knew it was coming. We all got those emails and brown envelopes from mobile providers, water companies and energy suppliers, but the jump in headline CPI to 3.5% was higher than expected.
“Although increases to benefits and wages will have gone someway to offset those rises, for households still trying to put the pieces back together after years of price hikes, all those bill increases coming at once will have been pretty tough to take.”
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Easter excesses and rising bills
Hewson added that the late timing of Easter exacerbated some of the hikes, with flight prices shooting up for school Easter holidays.
Sarah Coles, financial expert at investment website Hargreaves Lansdown, said: “Easter also forced a big shift in prices for recreation and culture – particularly overseas holidays – as businesses hiked prices in this peak period.”
But it was rising household bills that really pushed up prices, with water bills rising faster than any time since 1988, while the energy price cap rose by £111 for the average family and council tax was up by £109.
Food prices were up 3.4%, with butter, beef and lamb all rising significantly in price, while olive oil, rice, pizza, pasta and sugar all fell in price.
The money in your pocket and your bank account
Inflation means the money you are spending does not go as far, and if you have cash in your bank account, it loses value unless the savings rate you are getting is higher than the inflation figure.
The Bank of England recently cut interest rates, meaning that it is harder to get a rate on savings that surpasses inflation, as many banks have followed suit and cut their own rates.
Sally Conway, savings expert at Shawbrook Bank, said savers “face a double hit” because of this. However, it is still possible to find accounts that beat inflation. Moneyfacts Compare, which looks at the rates on different accounts, said there are currently 1,326 savings accounts that beat inflation, some with fixed terms and others that are easy access.
More rate cuts delayed
Coles said the Bank of England was predicting a spike in inflation in April and has factored this into its calculations about when to raise rates.
“These figures alone are unlikely to spark a dramatic rethink by the bank,” she said.
The Bank of England decides each month whether to raise or lower interest rates or keep them the same.
Coles said the market is now expecting one or two more rate cuts this year, when previously it had expected more. This is partly due to easing fears over the Trump tariff drama, where most extra costs have been delayed.
“The latest twists and turns in the Trump tariffs drama mean some of the growing concerns about a global slowdown have eased very slightly.
“If the pause in tariffs leads to long-lasting agreements, it could drop down the list of things the Bank of England has to worry about. If it drops far enough down the list, it could mean that concerns about inflation overtake it, which could put the brakes on rate cuts,” she added.
