Wed, 21 May 2025

Wed, 21 May 2025 Inflation surprise suggests the outlook could be gloomier than we thought

Bills, food prices, and service costs are all rising - but there is some good news

* April saw the highest inflation rate in over a year, with prices rising by 3.5% in the 12 months to April.
* This was driven by higher energy bills, the largest rise in water bills for over 35 years, and increased food and service prices.
* Airfares and vehicle excise duty also contributed to the increase, but these are expected to be temporary distortions.
* Despite this, pay rises have kept pace with inflation, meaning that many workers' money is still stretching further.
* Inflation remains lower than its peak of 11% in late 2022, and economists expect it to remain below 4%.
* However, some experts predict that prices could continue to rise due to factors such as National Insurance Contributions being passed on by employers.
* The government's policies may also contribute to higher inflation, prompting economists to think that interest rates may not be cut further this year.
* On the other hand, factors such as weaker global growth and trade deals with the EU could help bring down prices.
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