It is forecast that inflation in the United Kingdom will accelerate sharply this month, and the figures that are due next week are expected to show the most steep monthly increase in October 2022, as homes absorb a new wave of invoices.
The city analysts predict that the National Statistics Office (Ease) will inform the 3.6% inflation increase in April, compared to 2.6% in March that marks the largest jump month by month in more than two years.
This increase is being driven by a wide extension in energy and water invoices, together with the growing payroll costs of the employer, the highest minimum wages and other administrative positions introduced at the beginning of the new financial year.
In April, or Gem increased the energy price limit by 6.4% to £ 1,849, while the average annual home water invoice increased by 26% (£ 123) to £ 603, both important taxpayers to the expected inflation jump.
Sanjay Raja, chief economist of the United Kingdom in Deutsche Bank, predicted inflation to reach 3.4%, citing “historically large increases in energy and water invoices” and additional inflationary pressure of the changes to the municipal tax, the special vehicle tax and the air passenger service.
“Administrative law linked to index will be increasing,” Raja said. “A later Easter of the usual will also be added to the price impulse.”
The asset manager Investec anticipates a 3.3%reading, noting that the increase “will not be a surprise for the Bank of England.” Economists expect several members of the Monetary Policy Committee (MPC) to discuss the data next week.
While global energy prices have decreased, and pound has strengthened against the dollar, firing the cost of imports, national pressures are intense.
As of April 6, companies have faced an increase of £ 25 billion in the contributions of the National Employers Insurance, together with an increase of 6.7% in the minimum wage, both policies introduced by Foreign Minister Rachel Reeves in the October budget last year.
These increases are expected to affect sectors such as retail trade, leisure and hospitality, who use the number of workers on time already partial time.
Pantheon Macroconomics analysts echoed these concerns: “It is likely that payroll tax increases and the minimum wage increase that began in early April is the perfuse of a variety of companies to increase prices.”
Raja also suggested that price increases could be leaked in cultural services, including concerts and gallery admissions, noting that the Bank of England previously estimated that Nic changes would add 0.2 percentage points to inflation.
Despite the short -term increase, inflation will be predicted in 3% for the rest of 2025. Investors still expect the Bank of England to deliver two more -quarter interest cuts before the end of the end of the year, after the cuts in February and May, which led the base rate to 4.25%, its lowest level in more than two years.
While there are short -term pressures, the general inflation trajectory is expected to stabilize. However, those in charge of formulating policies must weigh the impact of national tax changes and global commercial tensions, including tariff uncertainty after President Trump’s policies, as they browse the way to sustainable growth and price stability.
Jamie Young
Jamie is a senior reporter of Business Matters, who brings more than a decade of experience in commercial reports of the United Kingdom. Jamie has a business administration title and participates regularly in conferences and industry workshops. When he does not inform about the last business development, Jamie is passionate about the mentoring of promising journalists and businessmen to inspire the next generation of business leaders.
