The UK’s Office for National Statistics (ONS) has reported that the country’s rate of inflation;more than doubled in just one month to 1.5% during April 2021
According to the ONS, the consumer prices index (CPI) measure rose from 0.7% in March,;marking the largest month-on-month spike in over a decade.
The increase was driven, the report said, by rising household utility, clothing, and motor fuel prices.
The ONS indicated that food prices also rose in April partly driven by;increased prices for chocolate, and ‘choc ices’ as people emerged from lockdown.
The inflation report also showed that confectionary prices, breads and cereals, and oils and fats all pushed;food inflation up during April.
Commenting on the report, ONS Chief Economist, Grant Fitzner intimated;that, “inflation rose in April, mainly due to prices rising this year, compared;with the falls seen at the start of the pandemic this time last year.
“This was seen most clearly in household utility bills and clothing prices. As the price of crude oil continues to rise, this has fed;through to the cost of motor fuels, which are now at their highest since January 2020.”
The ONS data showed motor fuel inflation rising at its fastest pace for more than four years. Experts say a £96 increase in the UK’s default tariff price cap during April contributed to the rise;while clothes shops also increased their prices last month as non-essential retail reopened.
Inflation set to rise above BoE target, April rise temporary
The Bank of England (BoE) had earlier announced that its target is for inflation to be around 2% in the medium term. Bank of England Chief, Andrew Bailey, said earlier this month that while the Bank sees inflation rising to 2.4% by the year’s end, driven largely by energy costs, it is expected to fall back below the 2% target soon after as price increases unwind.
Economists, however, forecast that inflation will rise above that when the BoE’s next update is delivered in a month’s time as prices for air travel, domestic accommodation and package holidays increase in response to recovering consumer demand.
Speaking in an interview, Ruth Gregory, senior UK economist at Capital Economics, posited that while inflation “looks set” to rise above the Bank of England’s 2% target later this year, her company predicts that April’s burst of inflation will be temporary.
She pointed outs out that “most of April’s increase was due to energy price effects – the 13.6% jump in motor fuels, and the 9.2% increase in the gas and electricity price cap.”
As a result, she doubts that “it will stay there long, as energy-related effects go into reverse next year, reopening inflation eases and the stronger pound pushes down on inflation.”
Jon Hudson, fund manager of Premier Miton UK Growth Fund, also noted that “Inflation is likely to continue rising throughout the year as lockdowns ease, the economy recovers and various commodity shortages feed through to rising prices.
“The recent strength of Sterling will act as a buffer for inflation as it reduces the cost of imports.”