Fuel prices pushed the UK inflation rate to a record high of 3.5% in April 2025, up sharply from 2.6% in March 2025. That 1% increase has caused a lot of concern among policymakers and economists. Above all, they worry about the cost of living crisis that has yet to stop hurting families across the UK.
The new inflation number is a stark reversal from what we’ve seen in recent months. In September 2024, this measure of the natural rate was at 1.7%, and it was actually closer to 0% in late 2020. By October 2022, inflation surged to a shocking 11.1%. This recent spike serves as a good reminder of the volatility that encompasses today’s economic landscape.
That jump in April was mostly attributable to major increases in the cost of living, especially the cost of utilities such as gas, water, and electricity. These increases were recently implemented on 1st April, as a result of new rules regarding the Ofgem energy price cap. Grant Fitzner, the acting director general of the UK’s Office for National Statistics (ONS), pointed out the growing expense. He noted their outsized effect on total inflation.
“Significant increases in household bills caused inflation to climb steeply. Gas and electricity bills rose in April compared with sharp falls at the same time as last year due to changes to the Ofgem energy price cap.” – Grant Fitzner, acting director general of the ONS
Chancellor Rachel Reeves said she was disappointed by the news of the new inflation spike and its difficulties for families. Mel Stride, shadow chancellor, agreed with these concerns calling the current inflation rate “concerning for families.”
“This is worrying for families.” – Mel Stride, shadow chancellor
The UK central bank, the Bank of England, has an inflation target of 2%. The number today is far higher than our target. This has created tremendous political pressure on the bank to reverse course on its tightening monetary policy. Historically, the Bank of England has responded to rising inflation by either cutting or raising interest rates to stabilize the economy.
Initial forecasts projected an increase of around 3.3%. Inflation has shot well past those forecasts. Stride slammed the current government’s mismanagement of the economy, claiming it has caused families’ living costs to rise.
“We left Labour with inflation bang on target, but Labour’s economic mismanagement is pushing up the cost of living for families.” – Mel Stride, shadow chancellor