Official figures show that last month saw the UK’s inflation rate rise to its highest level since September 2013. Inflation currently stands at 2.7%, which is a sharp rise from the 2.3% that was reported in March. Both figures are, however, above the 2% target set by the Bank of England.
The main explanation for this rise has been attributed to higher air fares than normal. Prices of flights rose compared to 2016 due to the later Easter holiday dates. This year Easter fell on the 16th April, as opposed to the 27th March in 2016. Air fares rose by a large increase of 18.6% when compared to a month earlier according to The Office for National Statistics.
Rising costs for electricity, clothing and vehicle excise duty also played a part in the steep rise in inflation. The clothing sector saw the largest rise in six years as it leapt 1.1% between March and April.
The figure could have been worse had it not been for a reduction in the price of petrol and diesel which helped to slightly offset the rise. The falling cost of fuel, which is primarily due to a knock-on effect of lower oil costs, will continue to please motorists as it helps to combat the rising cost of the UK’s overall inflation figures.
Warnings have been issued from the Bank of England suggesting that inflation could rise even more this year, and it has been predicted to peak just below 3%. The statement commented that 2017 could be “a more challenging time for British households” as prices rise against real wages falling, which would place an inevitable squeeze on consumer spending habits.
The British Chambers of Commerce head of economics, Suren Thiru said: “Businesses continue to report that the substantial increases in the cost of raw materials and other overheads over the past year are still filtering through the supply chain, and are therefore likely to lift consumer prices higher in the coming months.”
However, he did also comment that this growth in inflation was likely to be “transitionary in nature” and went on to note that there was little evidence to suggest that “higher price growth is becoming entrenched in higher pay growth”.
It is hoped that these figures will be a sufficient trigger for the Bank of England to keep interest rates on hold despite their previous warnings that the opposite may need to happen.