Inflation rises to 9% as energy bills soar | moneyfacts.co.uk

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Michael Brown

Content Writer
Published: 18/05/2022
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The increase means inflation is now at its highest point in 40 years.

Inflation increased to 9% today following April’s announcement from the Office for National Statistics (ONS). It means inflation is now at its highest level since 1982.  

“Inflation rose steeply in April, driven by the sharp climb in electricity and gas prices as the higher price cap came into effect,” said Grant Fitzner, Chief Economist at ONS.

Ofgem energy price caps come into effect twice a year, in April and October, which will ultimately determine the price of energy for households across the UK.

“The rise [of the energy price cap] resulted in 12-month inflation rates of 53.5% for electricity and 95.5% for gas, compared with rates of 19.2% and 28.3% respectively in the previous month,” the ONS said in its inflation report.

Other reasons for the increase

In addition to energy prices, restaurants and hotels saw a 1.7% increase in prices between March and April 2022, compared to the 0.7% recorded one year previously.

Much of this rise can be owed to the increase in Value Added Tax (VAT) restaurants, cafes and dancing establishments have experienced.

Games, toys, and hobbies, meanwhile, also increased in price, which was largely due to a strong demand for computer games. 

Will inflation increase again?

The Bank of England (BoE) expects inflation to increase further, reaching 10% before the end of the year. Much of this future increase will be owed to higher energy household bills, said Andrew Bailey, Governor of the BoE.

“Consumer price inflation is likely to peak later in the United Kingdom than in many other economies and therefore fall back later,” he wrote in an annual report to the Treasury Select Committee.

Danni Hewson, Financial Analyst as AJ Bell, shares a similar view.

“Whilst the intensity of last month’s shock won’t be repeated, at least until the next price cap change in October, the one thing consumers really need – price drops – aren’t likely for many months to come,” she said.

To find out how inflation will affect your savings, read what our Finance Expert, Rachel Springall, has to say. 

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