Rate of inflation more than doubles in just one month to 1.5%

Business

The rate of inflation more than doubled in just one month to 1.5% during April, posing a price rise challenge to the Bank of England amid the fragile economic recovery from the coronavirus crisis.

The Office for National Statistics (ONS) said the consumer prices index measure rose from 0.7% in March.

The increase was driven, the report said, by rising household utility, clothing, and motor fuel prices.

Inflation is surging in western economies following over a year of COVID-19 disruption.

The CPI measure stood at just 0.2% in February.

Financial markets have taken fright in recent weeks over fears crisis era central bank support will be gradually withdrawn, with interest rates raised from rock bottom levels, to counter the pace of price increases.

But custodians of central banks, including those in the US and the governor of the Bank of England, have signalled that they see the inflationary picture being dominated by “transitory” – not permanent – price movements.

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Instead, they see prices being distorted simply by life getting back into gear.

Bank of England chief Andrew Bailey told a committee of peers on Tuesday that there is no strong evidence yet that rises in prices paid by manufacturers are feeding through into the consumer prices.

Any hike in interests rates, aimed at countering price rise movements, would make borrowing more expensive and risk choking off economic growth.

At an annual rate of 1.5% the CPI measure is nearing the Bank of England’s target of 2% and economists forecast it will smash past that when the ONS delivers its next update.

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