The annual inflation rate in the UK more than doubled in April, as an increase in both energy and clothing has driven prices higher
The jump in the UK’s inflation rate up to 1.5% in April from 0.7% back in March, means that consumer prices are increasing at their quickest rate since March of 2020 at the outset of the COVID-19 pandemic.
The sharp rise has largely reflected a jump in prices from the low levels of just a year ago at the start of the UK’s coronavirus infections, according to the Office for National Statistics.
Higher oil prices have also pushed up petrol prices within the UK, it added.
According to the ONS, inflation in the UK has climbed as the nationwide lockdown restrictions had been eased and shops had reopened on the 12th of April. The rise in both clothing and footwear prices reversed an unusual fall back in February.
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Meanwhile, gas and electricity prices in the country had risen sharply after the default tariff cap was increased compared to a cut in the previous year.
Hannah Audino, an economist at PwC, said that she expected inflation in the UK to continue to rise as the nation’s lockdown restrictions ease and the economy continues to reopen “allowing consumers to unleash some of their excess savings”.
“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,” she added.
The UK’s April inflation rise had been predicted by economists, but there are concerns that the soaring levels of inflation this year as the global economy recovers from the pandemic could push central banks to raise their interest rates.
Inflation is the rate at which the cost of goods and services begins to increase. It’s one of the key measurements of financial well-being as it affects what consumers can buy for their amount of money. If there is inflation, then it means that money doesn’t go as far.
Inflation is expressed as a percentage increase or decrease in costs over time. For example, if the current inflation rate for the cost of a litre of petrol is at 2% a year, then motorists need to spend 2% more at the petrol pump than they did 12 months earlier.
And if wages don’t keep up with the rising inflation, then purchasing power and the standard of living for the public will fall.
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A little inflation, however, can typically encourage people to buy products sooner and makes it easier for companies to increase wages. And both of those things go on to then boost economic growth.
That’s why most countries’ central banks have a set inflation target of between 2% and 2.5%. In the UK, the government has set the inflation target for the Bank of England an of 2%.
Earlier in May, fears of a rising rate of inflation in the US hit financial markets after consumer costs had recorded their biggest annual jump since the year 2008.
Senior economist at HSBC, Liz Martins, said that it looked like UK’s inflation rate would go above the Bank of England’s 2% target, although this was “not too much of a worry for the Bank”.
“Their view is that they need to keep inflation sustainably around 2% two to three years out from now, so the short term overshoot won’t worry them too much, if it does prove temporary – and that’s where opinions really seem to diverge,” she told the BBC.