UK Rate of Inflation Doubles in April

Annual rates of inflation in the U.K. doubled in April, spurred on by rising prices in energy resources and clothing.

Inflation rates jumped to 1.5% in April from 0.7% in March as prices on consumer goods climbed at the highest rates seen since March 2020 at the start of the pandemic. 

The U.K.’s Office for National Statistics made a statement regarding the sharp increase, stating that the jump is likely in response to higher prices compared with last year, and higher oil costs driving up the price of gasoline.

The ONS saw a correlation between increased inflation and the easing of COVID restrictions in the U.K. on April 12. They also noted that clothing and footwear prices spiked after falling in February.

Gas and electricity prices spiked following a default tariff cap increase, reversing a cut made one year ago.

According to Pricewaterhouse Coopers economist Hannah Audino, inflation rates will likely continue to climb as global lockdown restrictions are lifted and economies begin to reopen. This will allow consumers to “unleash some of their excess savings” according to Audino.

“Recent survey evidence suggests that the share of households who plan to spend some of their savings has increased in recent months, as the vaccine rollout boosts confidence.”

Economists and investors had predicted an inflation increase in May, but the steep incline has some concerned that banks may begin raising interest rates in response.

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