UK’s inflation hits 15-month high as utility bills rise sharply

Wednesday, May 21, 2025 - Britain's annual inflation rate surged more than expected in April as energy and water bills rose sharply, official data showed on Wednesday, May 21.

The Consumer Prices Index soared to 3.5 percent last month, up from 2.6 percent in March, the Office for National Statistics said in a statement.

Analysts' consensus forecast had been for a jump to 3.3 percent. At 3.5 percent, the headline rate was the highest since the beginning of 2024, the ONS noted.

"I am disappointed with these figures because I know cost of living pressures are still weighing down on working people," Finance Minister Rachel Reeves said in a statement.

UK regulators allowed private companies to hike household bills from April, taking into account movements in oil and gas markets and indebted water providers.

"Significant increases in household bills caused inflation to climb steeply," ONS acting director general, Grant Fitzner, said in a statement.

"Gas and electricity bills rose... compared with sharp falls at the same time last year."

He noted that "water and sewerage bills also rose strongly... as did vehicle excise duty, which all pushed the headline rate up to its highest level since the beginning of last year".

Energy bills are expected to drop from July, however, following recent heavy falls to oil prices in the wake of US President Donald Trump's tariffs blitz, according to analysts.

Businesses were additionally hit in April by a tax hike and rise to the minimum wage, which both took effect last month having been introduced by the Labour government following its July election victory that ended 14 years of Conservative rule.

Tory spokesman on the economy, Mel Stride, blamed "Labour's economic mismanagement" for the surge to inflation.

"Families are paying the price for the Labour... choices," he added, as businesses pass on higher costs to consumers.

Analysts said the latest data could see the Bank of England ease the pace at which it has been cutting interest rates in recent months.

"The BoE's next move is far from straightforward," noted Richard Flax, chief investment officer at wealth manager Moneyfarm.

"The central bank is likely to remain cautious, potentially delaying rate cuts until there's clearer evidence that inflationary momentum is genuinely easing."