UK inflation rises to 1.5%
The UK inflation rate jumped to 1.5% in the 12 months ending in April amid rising household bills, clothing prices and fuel costs.
It comes after the Office for National Statistics (ONS) said the Consumer Price Index (CPI) hit 0.7% in March.
At the same time, inflation rose to 0.4% in February and 0.7% in January.
On a monthly basis, inflation rose 0.6% in April 2021, after rising 0.3% in March.
The rise in inflation comes as pubs, gyms, salons and non-essential stores opened for the first time in months on April 12 after the lockdown.
The hospitality industry then reopened for indoor dining on Monday, May 17.
How inflation affects your finances
INFLATION is a measure of the cost of living.
It examines how much the price of goods, such as food or television, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today to their cost a year ago. The average price increase is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or changing a lot, the Bank of England says it is difficult for businesses to set the right prices and for people to plan their spending.
High inflation rates also mean people have to spend more, while savings risk eroding as the cost of goods exceeds the interest we earn.
Low inflation, on the other hand, means lower prices and a greater likelihood that interest rates on savings will beat the rate of inflation.
But if inflation is too low, some people may postpone spending because they expect prices to fall. And if everyone cut back on spending, businesses could go bankrupt and people could lose their jobs.
Check out our UK inflation guide and is our inflation low? guide for more information.
The inflation surge also occurred when energy prices rose sharply, when the price cap for default tariffs was raised from April 1.
While rising oil prices have driven fuel inflation to its fastest pace in over four years.
Inflation is expected to rise this year as the UK and other countries around the world relax restrictions on coronaviruses.
The Bank of England forecast earlier this month that inflation will rise above its 2% target, to 2.4% in the last three months of 2021, largely due to prices of energy.
But Gov. Andrew Bailey has said he expects the spike to be temporary and inflation is expected to return to around 2% over the medium term.
ONS Chief Economist Grant Fitzner said: “Inflation rose in April, mainly due to the rise in prices this year from the drops seen at the start of the pandemic around the same time. ‘last year.
“This is most evident in household utility bills and clothing prices.
“As the price of crude oil continues to rise, this has spilled over into the cost of fuel, which is now at its highest since January 2020.”
While Steven Cameron, director of pensions at Aegon, added: “There is a growing realization that high inflation could be imminent, which reduces the purchasing power of individuals and what they could. buy with their savings over time.
“Keeping money in the bank usually earns interest, but if the interest rate is lower than inflation, money or purchasing power is effectively lost.
“With interest rates at historically low levels, dropping just above zero, any amount of inflation poses challenges for savers.”
And Ed Monk, associate director for personal investment at Fidelity International, said: “Inflation is now approaching the Bank of England’s 2% target and could jump beyond if demand hits. economy continues to grow in the coming months.
“The increase confirmed today appears to be driven both by pent-up consumer spending after more than a year of lockdown and by the return of more normal prices for fuels and other disrupted household utility costs. Last year.
“This confirms the fact that the savings that many households have been able to realize over the past year will be spent, contributing to a rapid recovery in overall growth.”
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We have explained how negative interest rates could affect your finances.
In February, the economy grew 0.4% despite the country’s lockdown.
Meanwhile, the job market has shown early signs of recovery, with unemployment falling to 4.8% between January and March of this year.