In April 2025, the rate of UK inflation rose to 3.5%, the first rise in months and the end of a consistent downtrend that began in mid-2023. Inflation rose from 3.2% in March, according to the latest figures released by the Office for National Statistics (ONS). The rise surprised many, adding to the uncertainty surrounding monetary policy at the Bank of England.
Domestic Units
When the cost of living rose in April, millions of UK households felt the weight of new financial pressure. The increase in food, household, gas and electricity prices was palpable, with most consumers reporting a noticeable spike in their weekly bills. This sudden rise in inflation directly hit the spending power, which had shown signs of recovery in the initial months of the year.
Bills for Energy
The energy sector was the biggest driver of inflation’s rise in April. Early in the month, Ofgem, the regulator of energy, increased the domestic price cap, allowing suppliers to increase prices. As a result, household energy prices on average rose by nearly 12%, reversing the late 2024 reductions.
The removal of government energy subsidies in March made the consumers open to the full cost of supplies, even though global wholesale petrol prices were stabilized. Energy companies transmitted these costs to customers almost immediately.
Cost of Food
The rising trend in food prices added further pressure to family budgets. Meat, dairy products, fresh fruit and vegetables, and cereals all experienced sharp price increases, the ONS said. Milk and bread prices rose 5.5% and 6.8%, respectively, year on year.
Traders attributed the continued rise in prices to the uncertainty in international commodity prices alongside higher transport and packaging costs. Global supply chains are better today than they were during the pandemic and Brexit-related disruptions, but consumers have not yet fully enjoyed the improvement.
Sector of Services
Core UK inflation, which excludes volatile food and energy prices, remained at 3.9% even as headline inflation reached 3.5%. This implies that inflationary pressures remain in place for many products and services. Core inflation is a measure of inflation that excludes certain items that face volatile price movements, such as food and energy, to provide a more accurate reflection of the economy’s long-term inflationary trend.
The services sector in general sustainably supported core inflation. Very strong pay rises in these companies fueled price rises for insurance, personal care services, hotels, and restaurants. Economists who are of the view that core inflation is a more accurate guide to long-run inflationary momentum were concerned by this trend.
The Bank of England
The Bank of England was put in an uncomfortable situation due to the inflation figures. Following maintaining the base rate of 5.25% since August 2023, policymakers at the Bank had stated only weeks before that the economy could be ready for a gradual reduction in interest rates. But the April inflation figures put such a forecast in doubt.
In a press statement, Governor Andrew Bailey accepted the rise in inflation and stated the Bank will continue to monitor new data before making any other move. “We remain committed to bringing inflation back to our 2% target in a sustainable way,” Bailey explained. The Bank can now hold off on any rate reductions until late summer or autumn, economists say, and the Monetary Policy Committee (MPC), which is responsible for setting the UK’s official interest rate and implementing monetary policy, is set to convene again in June.
Political Influence
The government’s handling of the cost-of-living crisis has come under scrutiny in the wake of rising UK inflation. As prices surged, opposition politicians accused ministers of not doing enough to support vulnerable households. Chancellor Rachel Reeves defended her government’s record, pointing to previous tax relief and energy bill subsidies that had shielded individuals from the worst effects.
“We understand that the prices remain high, and we are closely monitoring the situation,” Reeves said. She emphasised that the government’s long-term strategy to combat inflation covers additional investments in food supply resilience, such as supporting local food production, and energy efficiency, including promoting renewable energy sources and improving energy conservation measures.
The UK’s April inflation underscores the fragile progress towards rebuilding price stability, rising to 3.5%. Core inflation suggests that underlying pressures in prices still exist, though energy and food prices remain key drivers of inflation. While this surge could prove transitory, it reminded consumers and policymakers that inflation remains a pressing economic issue.
Managing inflation without dampening the delicate economic recovery is a delicate balancing act that needs to be done by the government and Bank of England as they prepare for the second half of 2025.
