UK Inflation Surges to 3.5% Despite Rate Cuts, Raising Concerns Over Economic Outlook
Inflation in the UK unexpectedly jumped in April 2025, casting doubt on the recent interest rate cuts by the Bank of England and complicating the path forward for monetary policy.
According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) rose 3.5% year-on-year in April, up sharply from 2.6% in March. The broader CPIH measure, which includes owner occupiers’ housing costs, also climbed to 4.1%, up from 3.4% in the previous month.
On a monthly basis, CPI increased by 1.2%, compared to just 0.3% in April 2024. The CPIH monthly figure also surged by 1.2%, more than double the 0.5% increase recorded a year earlier.
Key Drivers of the Inflation Upswing
The data points to a rebound in price pressures, particularly in:
- Housing and household services
- Transport
- Recreation and culture
These categories provided the largest upward contributions to the headline inflation figures. The only major relief came from clothing and footwear, which helped slightly offset the overall surge.
Core Inflation Also on the Rise
Core inflation, which strips out volatile items like energy, food, alcohol, and tobacco, also ticked higher:
- Core CPIH rose to 4.5% (from 4.2% in March)
- Core CPI climbed to 3.8% (from 3.4% in March)
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This indicates that underlying inflation pressures are broadening and becoming more entrenched. Goods inflation, previously subdued, rose from 0.6% to 1.7%, while services inflation continued to climb—reaching 5.8% for CPIH and 5.4% for CPI.
Policy Implications
The inflation surge comes just weeks after the Bank of England implemented a rate cut, aiming to support a slowing economy. Markets had largely expected inflation to continue easing in line with falling energy prices and earlier disinflation trends. The sudden rise may now force policymakers to reassess the pace of further easing—or even halt it altogether.
Economic Outlook
This unexpected uptick places pressure on both the central bank and the government, as higher prices erode purchasing power and squeeze household budgets. With core inflation climbing and services costs accelerating, the road to the Bank of England’s 2% inflation target may prove bumpier than anticipated.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
