Dearer energy bills and a pick-up in the cost of transport have pushed the annual rate of inflation back above the government’s 2% target for the first time in four months.
Figures from the Office for National Statistics showed that inflation as measured by the consumer prices index stood at 2.1% in April, up from 1.9% in March.
Household bills for electricity and gas rose last month as utility companies took advantage of the government’s decision to lift the cap on energy costs. Peter Earl, the head of energy at comparethemarket.com, said: “Energy costs were a major driver in the spike in inflation – and the rise in these costs is partly attributable to Ofgem’s energy price cap increase. The estimated 15m households languishing on a standard variable or default tariff have been hit by brutal increases to their energy bills.
“The new price cap level that came into force on 1 April saw those customers face an average annual price rise of £117, a hefty 10% increase, which all of the big six energy companies were quick to implement.”
The timing of Easter was also a factor in pushing up the cost of living, with airlines increasing prices by 26% in response to stronger demand for flights over the holiday period. The cost of fuel for motorists also increased in response to higher oil prices.
The ONS said the upward effect on inflation of energy and transport was partly offset by cheaper computer games and package holidays. Strong competition among clothing retailers also acted as a brake on inflation.
Financial markets were expecting inflation to rise last month and had been forecasting a slightly bigger increase. Core inflation, which does not include energy and food, remained steady at 1.8%
Although earnings are still rising faster than prices, rising inflation will eat into consumer spending power.
Separate ONS figures showed that rising global oil prices are starting to push up industry’s fuel and raw material costs. These were up 3.8% in the year to April compared to a 3.2% increase in the year to March.
