The annual UK inflation rate more than doubled in April this year. Prices were driven higher by rising energy and clothing costs. Petrol prices were also pushed up by higher oil costs.
Inflation climbed as lockdown restrictions eased on 12 April and shops reopened. The rate jumped from 0.7% in March to 1.5% in April, meaning consumer prices are rising at their fastest since the start of the pandemic. The sharp increase reflects the change in prices from the low levels a year ago.
According to the Office for National Statistics (ONS), the rise in clothing and footwear prices turned around following a fall in February. Meanwhile, gas and electricity prices saw a sharp rise after an increase in the tariff cap.
Inflation is expected to continue to rise as lockdown restrictions ease further and the economy continues to reopen. Consumers will have excess money to spend that has been saved due to staying at home during the pandemic. The vaccine rollout boosts confidence in people, who are now ready to get back out again and do things.
The rise in inflation was predicted by economists, who are concerned about the soaring rate as the global economy recovers from the pandemic. They fear it could push central banks to raise interest rates.
What is inflation?
Inflation is the rate at which the prices for goods and services differ, presented as a percentage increase over time. It is a good measure of people’s financial wellbeing because it affects what consumers can afford. The higher the inflation, the less their money will stretch. If the amount that people earn does not increase at the same rate as inflation, people’s purchasing power and state of living falls.
A little inflation can boost economic growth as it encourages people to buy sooner, before prices increase more. The government sets the target inflation rate for the Bank of England at 2%. The target inflation of most countries’ ventral banks is between 2% and 2.5%.
The opposite of inflation is deflation, which is the percentage decrease in prices.
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