Inflation surges to four-year high in April

British inflation hit a 3.5-year high in April, official data showed Tuesday.

A survey published earlier today showed inflation gnawed further into the budgets of British households this month, resulting in the sharpest fall in cash available to spend in two-and-a-half years.

Apart from the higher air fares (which was mainly down to the timing of Easter), there were also upward effects from clothing, vehicle excise duty and electricity prices.

But the steady rise in inflation since then, combined with weak wage growth, has slowed its momentum this year.

On a month-on-month basis, it stated that the food sub-index increased by 2.04 per cent in April, down by 0.17 per cent points from 2.21 per cent recorded in March.

Rising inflation, fuelled by rising energy costs and the pound's post Brexit vote plunge, nearly completely cancelled out the growth in pay of British workers during the three months to February, official data showed last month.

Last week, the bank reaffirmed its belief that inflation will peak at 2.8% this year, reaching that mark in the fourth quarter.

Fuel and lighting inflation rose to 6.13 per cent compared to 5.5 per cent in March.

Excluding bonuses, wages rose by 2.1% in the three months to March, missing forecasts for it remain in line with February's 2.2% advance.

Food prices also rose in April, by 0.2 per cent.

"The BoE will likely have been aware of the (inflation) spike in April when it released its new forecasts and made its decision last week, so from a monetary policy perspective, little has probably changed", said Craig Erlam, analyst at Oanda trading group.

Inflation is heading toward 3% this year and squeezing consumer spending, the engine of the economy.

Danske Bank economist Conor Lambe said inflation would continue to exert some pressure on households' spending power but he did not expect to see a huge fluctuation in the rate going forward.

Aside from the headline figure, core inflation - which strips out more volatile products and services - rose sharply to 2.4 per cent up, from 1.8 per cent in March, and was also above consensus.

A slump in the pound since the Brexit vote - making imports more expensive - has helped drive up the cost of living.

The CPI including owner occupiers' housing costs (CPIH) hit its highest level since June 2013 at 2.6 per cent in April, up from 2.3 per cent in March.

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