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UK inflation rose more than expected to 3.5 per cent in April, underlining the Bank of England’s challenge as it considers when to press ahead with lowering interest rates.
Wednesday’s figure from the Office for National Statistics surpassed both the 3.3 per cent predicted by analysts polled by Reuters and March’s 2.6 per cent.
The BoE reduced rates by a quarter-point this month to their lowest level since 2023 amid signs of easing inflation.
But the Monetary Policy Committee was split over the decision. On Tuesday, chief economist Huw Pill said he feared the BoE was reducing rates too rapidly and that the momentum behind falling inflation was “stuttering”.
This month, the BoE predicted April’s inflation figure would be elevated due to an increase in the Ofgem household energy price cap, as well as higher water bills.
Chancellor Rachel Reeves’ increase in employer national insurance contributions was also expected to stoke price pressures.
But the BoE still expects inflation to subside late this year after reaching 3.7 per cent in September, falling back to the central bank’s 2 per cent target in 2027.
Following the release of April’s figure. the pound was little changed, up 0.3 per cent against the dollar at $1.343.
This is a developing story
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