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A surge in oil prices and a rise in household gas and electricity bills pushed UK inflation to 1.5% in April, its highest level since the start of the coronavirus pandemic in March 2020, according to official figures.
An increase in the cost of clothing and footwear also played a part in the jump from 0.7% in the previous month as the government eased restrictions and more retailers opened on the high street.
The rate of inflation remains below the Bank of England target of 2% but the latest figures will fuel concerns that the cost of living is on a rising trend.
Crude oil prices have tripled over the past year after dropping to almost $20 (£14.08) a barrel last April. Some of this rise has passed through to the pumps, the Office for National Statistics said, taking the average price of petrol at the pumps in April to 125.5 pence per litre, up 1.8p on the previous month.
The ONS said the lifting of the price cap on gas and electricity prices had also increased household utility bills.
The Bank of England governor, Andrew Bailey, said on Tuesday that the central bank was sticking by its forecast that inflation would remain only slightly above target over the next year as the economy recovered before falling back in 2022.
Some analysts have voiced fears that inflation will escalate as consumers spend an estimated £150bn of savings accumulated over the last 14 months. However, the Bank of England has argued that spending is likely to be more modest, putting less pressure on prices.
Ambrose Crofton, a global market strategist at JP Morgan Asset Management, said: “The successful vaccine rollout has paved the way for the reopening of the economy, and now consumers are eager to make up for lost time.”
He added that Covid-19 and Brexit were causing bottlenecks in supply shipments to the UK that would add to shortages and increase prices over the coming months.
“The manufacturing side of the economy is experiencing acute disruptions. A confluence of factors including Brexit-related trade frictions, rising commodity and freight prices are adding cost-push pressure.
“It is expected that these factors should prove transitory but exactly how long it is before bottlenecks are resolved remains highly uncertain,” he said.
“Surging demand and supply bottlenecks were always going to lead to a jump in prices. The big question is how persistent these forces prove to be and judging by economists’ forecasts, the jury is still out.”
In 2011, inflation increased to 5.2%, largely on the back of a dramatic rise in oil prices that followed the 2008 financial crash.
Source: The Guardian
Keyword: UK inflation more than doubles in April as energy prices increase | Inflation