UK inflation rose to 3.5% in April 2025, up from 2.6% in March, marking the highest rate since January 2024, according to the Office for National Statistics.
The increase was driven by higher household bills, including energy, water, and broadband costs, as well as increased labour expenses.
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Food inflation also climbed to 3.4%, reflecting the impact of rising costs on consumers.
Household bills and labour costs drive inflation surge
The sharp rise in inflation was largely attributed to increased household expenses. Water and sewerage bills surged by 26.1%, the highest increase since 1988, while Ofgem raised the energy price cap by 6.4% to £1,849.
These changes significantly impacted the overall cost of living. Additionally, a 6.7% increase in the National Living Wage and higher Employers’ National Insurance contributions added to business costs, which were subsequently passed on to consumers.
Kris Hamer, Director of Insight at the British Retail Consortium, noted that “headline inflation accelerated in April as additional costs from rising National Living Wage and Employers’ NI costs filtered through to prices faced by consumers, as well as rising costs of utilities.”
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By GlobalDataFood prices rise amid broader cost pressures
Food inflation reached 3.4% in April, influenced by increased labour and operational costs in the retail sector.
Despite the overall rise, some food items experienced price reductions, with dairy products such as milk, cheese, and eggs falling in price during the month. Hamer highlighted that “even with food prices rising overall, there were still deals to be had.”
However, the British Retail Consortium has forecasted that food inflation could hit 5% by the end of 2025, citing the £5 billion in new costs affecting the industry.
Retail sector faces challenges amid rising costs
The retail industry, employing over 3 million people in the UK, is confronting significant financial pressures due to increased operational costs.
These include higher wages, taxes, and utility expenses. Hamer emphasized that “rising inflation was inevitable following the wave of additional costs hitting employers, and particularly retailers.”
He urged the government to find ways to reduce business costs and regulatory burdens, stating that it is imperative for the Employment Rights Bill to target unscrupulous employers without imposing additional costs on responsible businesses, which could negatively impact retail employment.
The unexpected rise in inflation may influence the Bank of England’s monetary policy decisions. Having recently reduced interest rates to 4.25%, the Bank may now adopt a more cautious approach to further cuts, considering the persistent inflationary pressures.
Core inflation, excluding volatile items like energy and food, rose to 3.8%, and services inflation increased to 5.7%, both exceeding forecasts.
These developments suggest that inflation may remain above the Bank’s 2% target for an extended period.
