UK consumer price inflation hit 9% in April, which is the highest since current records began, according to new data from the Office for National Statistics, up from 7.0% in March.
The ONS calculated that the consumer price index (CPI) was likely to be the highest since 1982 and, although it was not as high as the 9.1% expected, retail price inflation (RPI) crashed into double–digits at 11.1%.
Underlying core CPI inflation, which excluded energy, food, alcohol and tobacco, rose to a new 30-year high of 6.2% for April, as expected, versus 5.7% previously.
Inflation continued to run much higher than UK wage growth, which excluding bonuses, rose by 4.2% in the three months to March, meaning real wage growth remains negative.
The rise in headline CPI was mostly driven by higher energy prices, the ONS said, which rose by 46.5% on the month, with electricity up 40.5% and gas 66.8% higher as the Ofgem price cap was increased.
'More misery and rate hikes'
This "heaps more misery on households and highlights the pressure on the Bank of England to keep raising interest rates", said Paul Dales at Capital Economics, who predicted rates will be raised from 1.00% now to 3.00% next year.
The rise in core inflation was driven by gains in recreation/culture prices and restaurant/hotels inflation, which was in part due to businesses passing on higher product and wage costs and some were due to the reversal of the government’s pandemic temporary cut to VAT for the hospitality sector.
"A lot of these moves are being driven by domestic factors as well as global ones," said Dales.
Kallum Pickering, an economist at Berenberg, called the surge in the figures "eyewatering", with CPI jumping by a huge 2.5% from month-to-month, more than the 2% annual change the Bank of England targets.
"The inflation surge is mainly due to a combination of the global supply chain dislocations which emerged during the recovery from the pandemic and recent commodity market disruptions linked to Russia’s invasion of Ukraine," he said.
Pickering said with inflation in line with the BoE’s latest estimate, it "should not change its near-term reaction function or guidance" and so Berenberg continues to expect two more 25 basis points hikes this year.
As the CPI surge is driven by the externally-driven rise in energy prices, he said BoE policymakers "are likely to be less worried by the latest data than some headlines may suggest".
On its own, Pickering said the data seemed to support the case for the BoE to start other policy tightening measures, namely actively selling gilts, in August "at a reasonably fast pace of perhaps £4bn per month".