FX.co ★ UK Inflation Rate Accelerates to 3.5%

In April 2025, the United Kingdom experienced a notable surge in the annual inflation rate, reaching 3.5%, the highest point since January 2024. This represents an increase from 2.6% in March and exceeds expectations of 3.3%. The primary driver of this rise was the significant increase in housing and utilities costs, which leaped to 7.8% from 1.8%, driven mainly by electricity, which shifted from a decline of 8.8% to an increase of 4.6%, and gas, which jumped from a 12% decrease to a 12.2% increase. This shift reflects the impact of the new Ofgem energy price cap implemented in April 2025. Although rental prices for housing did rise by 6.3%, this was at a reduced rate compared to March's 7.2%, providing a slight counterbalance to the overall inflation trend. Additional pressure on inflation came from increased costs in transportation, which climbed to 3.3% from 1.2%, largely due to the introduction of Vehicle Excise Duty on both old and new electric vehicles in April. The sectors of recreation and culture, particularly foreign holidays, and food and beverages also contributed to rising inflation, with these categories increasing by 3.1% and 3.4%, respectively. In the food sector, the rise was notably due to higher prices for meat, mineral water, bread and cereals, and sugar and jam. Conversely, a significant offsetting factor was the decline in clothing and footwear prices, which fell by 0.4% compared to a previous rise of 1.1%, as more products went on sale.