In April, despite the sunny weather, the month was characterized as “awful” for various economic reasons. Energy bills saw an increase, alongside the largest surge in water bills in over 35 years. Additionally, the prices of food, services, and airfares continued to rise, resulting in the highest inflation in a year, standing at 3.5% in the 12 months leading up to April. This surge outpaced the rate of inflation in France and Germany.
Fortunately, many workers are experiencing pay rises that outpace the rate at which prices are rising, allowing their money to stretch further. While inflation is significantly lower compared to the peak of 11% in late 2022, it remains high and shows no immediate signs of reversing. The spike in gas and electricity bills was driven by higher wholesale global costs, which may take time to translate into lower prices for customers due to billing structures.
While some factors contributing to April’s inflation, such as the spike in airfares and vehicle excise duty, are expected to reverse, price pressures in services like restaurant meals persist. Economists are concerned that bosses are passing on wage cost increases to consumers, potentially further exacerbating inflation. Some experts predict a gradual increase in inflation over the next few months, remaining below 4% but not falling back to 3% until next year.
Various factors, including the impact of US President Donald Trump’s trade war and recent agreements with the EU, could help alleviate inflation pressures. The trade war has led to expectations of weaker global growth, resulting in lower commodity prices that could translate to reduced petrol and food costs. While uncertainties in trade policies persist, the potential influx of cheaper imports from countries like China may further mitigate inflation. Despite the challenges, the economic outlook remains uncertain, prompting households to brace for potential hardships ahead
Read the full article from The BBC here: Read More
