British consumer price inflation more than doubled in April. The Bank of England hopes that this will be a temporary surge, because the economy is recovering from last year’s slump due to the pandemic.
The Office for National Statistics said that the Consumer prices rose by 1.5% in April. This follows a 0.7% rise in March. The inflation is pushed up by the jump in regulated electricity and gas bills and clothing and footwear prices, and also from the cost of petrol, hit by rising global oil prices.
As the global economy is picking itself after the pandemic, the inflation is expected to accelerate in the coming months. Howard Archer, an economist with forecaster EY Item Club said that with inflation set to pick up further over the coming months and the economy looking poised for decent recovery from the second quarter, attention is increasingly focusing on when the Bank of England could start to tighten monetary policy rather than will the Bank provide further stimulus.
The Office for National Statistics said that the core inflation rose by 1.3% in the 12 months to April. This excludes energy prices and other volatile items. The inflation in Britain will hit 2.5% at the end of 2021, exceeding its target says the BoE. This is due to the rise in global oil prices and the expiry in September of covid emergency cuts to value-added tax in the hospitality sector. The BoE thinks inflation will then slip back to 2% in 2022 and 2023.
The prices charged by manufacturers rose by 3.9% in the year to April. In two and a half years, this is the biggest. Then the prices they paid for their inputs rose by 9.9%. These were got from the data. BoE Governor Andrew Bailey said that there had been little sign so far that these producer cost pressures had fed much into consumer prices in Britain.
U.S. consumer prices jumped to an annual rate of 4.2% in April showed the data. This will prompt the investors to up their bets on the Federal Reserve raising interest rates sooner than it had signalled.