You are here: Home - Saving & Banking - News -

Rising energy prices push inflation to 2.1%

Written by:
Higher energy prices and air fares have helped to nudge inflation above the Bank of England’s target for the first time in four months.

UK consumer price inflation rose (CPI) to 2.1% in April, up from 1.9% in March, according to the Office for National Statistics (ONS).

This sits above the Bank of England’s inflation target rate of 2%.

The ONS said electricity and gas prices rose by 10.9% and 9.3% respectively between March and April, thanks in part to the increase in Ofgem’s energy price cap on 1 April.

Most of the big energy suppliers hiked their standard variable rates as a result of the price cap rise.

The largest offsetting contribution came from a range of recreational and cultural items, including computer games and package holidays, the ONS said.

The upward trend in inflation coincides with a slowdown in wage growth.

Wages rose by 3.2% over the three months to March, down from 3.5% over the three months to February.

“The news will worry consumers as real wage growth comes under threat once more, after a year of inflation running below wage growth,” said Ian Forrest, investment research analyst at The Share Centre.

Interest rates to rise?

Under normal circumstances, rising inflation could act as a trigger for the central bank to raise interest rates.

However, Brexit uncertainty means the Bank of England may hold fire.

“With the Brexit uncertainty dragging on the central bank is likely to remain in wait and see mode,” said Sophie Kilvert, of wealth manager Seven Investment Management.

Ben Brettell, senior economist at Hargreaves Lansdown, added: “The MPC [Bank of England’s Monetary Policy Committee] is rightly reluctant to tweak policy while Brexit hangs over the economy like the Sword of Damocles.

“Moreover, fuel and energy prices are notoriously volatile from month to month, and are usually led by factors outside the control of domestic monetary policy.

“I’d expect the headline rate to fall back as we move through 2019.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week