The UK’s inflation rate has jumped to its highest level in over a year, driven by a sharp rise in household bills and energy costs. Official figures released by the Office for National Statistics (ONS) show that the Consumer Prices Index (CPI) rose by 3.5% in the 12 months to April 2025, up from 2.6% in March and well above the Bank of England’s 2% target.
Key Figures and Trends
- CPIH (Consumer Prices Index including owner occupiers’ housing costs) increased by 4.1% in the year to April, up from 3.4% in March.
- Monthly inflation: Both CPI and CPIH rose by 1.2% in April alone, compared with 0.3% and 0.5% respectively a year earlier.
- Core inflation (excluding energy, food, alcohol, and tobacco) also accelerated, with core CPI rising to 3.8% and core CPIH to 4.5%.
What’s Driving the Increase?
The surge in inflation was primarily fuelled by significant rises in the cost of housing and household services, notably water, gas, and electricity. These increases followed changes to the Ofgem energy price cap, which led to a notable jump in average household energy bills. Water and sewerage charges alone soared by 26.1% in April—the largest monthly rise since at least 1988.
Other key contributors included:
- Transport: Prices rose by 3.3% year-on-year, with airfares up 27.5% in April, partly due to the timing of the Easter holidays.
- Recreation and culture: Up 3.1% year-on-year, also influenced by higher holiday costs.
- Food and non-alcoholic beverages: Prices increased by 3.4% over the year, with notable rises in meat, bread, cereals, and sugary products.
The overall inflation rate was partially offset by falling prices in some categories. Clothing and footwear prices, for example, dropped by 0.4% over the year, with a larger proportion of items on sale than usual, likely due to the timing of the Easter holidays.
International Context
The UK’s inflation rate now sits above that of key European economies, such as France (0.9%) and Germany (2.2%) for the same period. This divergence highlights the particular pressure on UK households from domestic energy and utility costs.
The unexpected jump in inflation has raised concerns about the cost of living and could influence the Bank of England’s approach to interest rates. With the annual rate now at its highest since February 2024, analysts suggest the Bank may delay further rate cuts to avoid fuelling additional price rises.
“An increase in household expenses has driven UK inflation to its peak level in over a year. Official statistics reveal that inflation reached 3.5% in April, climbing from 2.6% in March. On April 1, prices for water, gas, and electricity surged, along with several other bills, causing inflation to exceed the Bank of England’s 2% target.”
Industry Insights
Nicholas Hyett, Investment Manager, Wealth Club, said: “The UK’s disinflation story has gone down the drain this morning. Higher water and energy prices were always expected to push up inflation in April. In the event prices have risen even faster than expected – with the price of household services rising a whopping 7% year-on-year while water and sewerage costs alone up 26.1% month-on-month.
The spike could cause a bit of a stink at the Bank of England, which cut interest rates just a couple of weeks ago only to see inflation smash through the 2% target. Two members of the MPC wanted to leave rates unchanged, and may well feel vindicated by today’s number. Higher core inflation will be particularly concerning – since this measure of domestically generated inflation should be easier for the Bank to influence.
The net effect of all this is a greater squeeze on the consumer, together with the probability of fewer interest rate cuts in the near term. Neither of those is good news for the government’s growth agenda – which, despite surprisingly strong GDP growth in recent months, risks getting bogged down before the structural reforms to underpin future growth are in place.”
April’s inflation figures mark a reversal of the recent trend of slowing price rises, with energy and utility costs placing renewed pressure on UK households. While some categories, such as clothing, have seen price drops, the overall cost of living continues to rise sharply—posing fresh challenges for policymakers and consumers alike.”
Professor Joe Nellis is economic adviser at MHA, the accountancy and advisory firm, said:
“The jump in the inflation rate to 3.5% is a rise of 0.9%,the highest monthly rise since the height of the inflation crisis in October 2022. However, the Bank of England should not panic — this remains a far cry from the 11.1% recorded at that time.
This jump was not unexpected and follows a series of regulated price increases from the Government and national regulatory authorities. This includes increased employer costs outlined in the Chancellor’s Autumn Budget, the raising of the energy price cap, and higher water bills and council tax for households.
High earnings growth, caused by a stubbornly tight labour market, is applying persistent inflationary pressure, and has combined with the regulated price rises to create this inflation surge. Nonetheless, underlying inflationary pressures should not be the Bank of England’s number one priority at the moment.
Despite the worries of the Bank of England’s chief economist that interest rates are being cut too quickly, the Monetary Policy Committee should continue to pursue their current rate-cutting strategy in aid of reigniting the sluggish UK economy.
As always, the Bank must weigh up the competing priorities in the economy, and halting rising inflation certainly is one — but, for now, doing all they can to drive economic growth must rule the day.”
Blake Richmond, Chief Operating Officer at Resonate Group, commented: “As the government ramps up R&D spending plans for the next decade, it’s important that transport and the railway network are top of mind for innovation. Investing in our nation’s railways can significantly unlock regional benefits through job creation, improved transport connections and encouraging local development, helping to turbocharge growth in regional hubs.”
The plan also seeks to deliver longer-term funding for infrastructure including large-scale research facilities and equipment, to increase the chances of driving technology solutions that have a significant public impact.
Kate Nicholls, Chief Executive of UKHospitality, said: “This significant increase in inflation is unsurprising given the £3.4 billion in annual cost increases that hit hospitality in April.
“It’s clear that, on top of continuing hikes in utility prices, the raft of additional costs from the Budget, which came into force in April, is putting unsustainable cost pressure on already strapped businesses. Regrettably, that forces up prices and so fuels inflation.
“This strengthens the need to tackle the ongoing cost of doing business crisis. The Government must look to bring down costs for businesses and it’s critical that the Bank of England meets market expectations to lower interest rates in the coming months.”
April’s inflation figures mark a reversal of the recent trend of slowing price rises, with energy and utility costs placing renewed pressure on UK households. While some categories, such as clothing, have seen price drops, the overall cost of living continues to rise sharply—posing fresh challenges for policymakers and consumers alike.
