UK inflation more than doubled to 1.5 per cent in April on the year marking the start of what the Bank of England hopes will be a temporary surge in prices as the economy reopens from the latest round of restrictions.
The sharp rise in Consumer Price Inflation followed a 0.7 per cent annual increase in March, the Office for National Statistics said, with the jump driven mainly by a rise in domestic energy prices along with clothing and footwear and the cost of petrol.
As the UK’s reopening allows consumers to start splurging cash, the BoE expects inflation to exceed its 2 per cent target and reach 2.5 per cent by the end of this year.
ONS chief economist Grant Fitzner said April's inflation surge was caused by the rise in prices this year compared with the falls seen at the start of the pandemic last year.
“This was seen most clearly in household utility bills and clothing prices,” Mr Fitzner said.
“As the price of crude oil continues to rise, this has fed through to the cost of motor fuels, which are now at their highest since January 2020.”
On a monthly basis, the CPI rose by 0.6 per cent in April, after a 0.3 per cent increase in March. This compares with a fall of 0.2 per cent in April last year.
The 9 per cent surge in gas and electricity prices drove April's inflation rise, the ONS found, while clothing and footwear prices rose 2.4 per cent after a 1.6 per cent drop a year ago.
Prices charged by manufacturers rose 3.9 per cent in the year to April, the biggest rise in more than two years, while a measure of input prices paid for raw materials by factories rose 9.9 per cent from a year earlier, the fastest rate since February 2017.
BoE governor Andrew Bailey on Tuesday said there was no strong evidence that higher prices paid by manufacturers were feeding through to consumer prices.
However, he said the central bank would "be watching this extremely carefully" and take action if necessary.
Laith Khalaf, financial analyst at AJ Bell, said the price rises were in key areas where it is hard for consumers to control spending, such as transport, clothing and household energy.
“At current levels, inflation is nothing to fret about but there is rising concern that the fiscal and monetary response to the pandemic has sown the seeds of an inflationary scare farther down the road,” Mr Khalaf said.
“For the moment, the BoE is dismissing consumer price increases as a natural bounce back from the depths of the pandemic last spring. But the economic recovery could be a Trojan horse, smuggling inflation into the UK right under the nose of central bankers.”
UK inflation is set to rise further over the months ahead with prices for air travel, domestic accommodation and package holidays expected to leap in response to rebounding consumer demand, Samuel Tombs, UK economist at Pantheon Macroeconomics said.
The end of the VAT cut to help hospitality businesses through the Covid-19 crisis from October will also boost prices, although the end of the furlough scheme and an accompanying rise in unemployment may ease BoE fears over prices running out of control, he said.
Despite the rising inflation rate, the UK was still behind the US, where the latest reading came in at 4.2 per cent.
Meanwhile, eurozone inflation rose 1.6 per cent on the year in April because of a sharp rise in the costs of energy and services, according to the European Union's statistics office Eurostat, with a 0.6 per cent increase on March.
“The BoE has made it clear that it will tolerate inflation rising modestly above target, without pulling the trigger on interest rate rises,” Mr Khalaf said.
“However, if inflation looks like it’s going to get a significant foothold, markets will take matters into their own hands and raise borrowing costs across the economy.”
Meanwhile, inflationary fears have already started to trickle into markets, with the 10-year gilt now yielding 0.9 per cent, up from 0.2 per cent at the beginning of the year.
The UK experienced soaring inflation in the 1970s and ‘80s, but the BoE dismissed recent increases in 2008 and 2011 as temporary, despite prices surging close to 5 per cent in both instances.
Andy Haldane, the BoE’s departing chief economist, said the momentum behind the recovery was strong enough to risk a damaging wave of inflation.
If a sustained inflationary period is realised, Mr Khalaf said it would be a paradigm shift from 25 years of extremely benign price rises, “which have provided comforting mood music for stocks and bonds”.
“Investors don’t need to hit the panic button just yet, but they do need to factor the potential for higher rates of inflation into their plans. Where inflation is concerned, it’s better safe than sorry," he said.
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
Killing of Qassem Suleimani
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Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
UAE currency: the story behind the money in your pockets
The specs: 2018 Ford Mustang GT
Price, base / as tested: Dh204,750 / Dh241,500
Engine: 5.0-litre V8
Gearbox: 10-speed automatic
Power: 460hp @ 7,000rpm
Torque: 569Nm @ 4,600rpm
Fuel economy, combined: 10.3L / 100km
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
UAE currency: the story behind the money in your pockets
FIGHT CARD
Welterweight Mostafa Radi (PAL) v Tohir Zhuraev (TJK)
Catchweight 75kg Leandro Martins (BRA) v Anas Siraj Mounir (MAR)
Flyweight Corinne Laframboise (CAN) v Manon Fiorot (FRA)
Featherweight Ahmed Al Darmaki (UAE) v Bogdan Kirilenko (UZB)
Lightweight Izzedine Al Derabani (JOR) v Atabek Abdimitalipov (KYG)
Featherweight Yousef Al Housani (UAE) v Mohamed Arsharq Ali (SLA)
Catchweight 69kg Jung Han-gook (KOR) v Elias Boudegzdame (ALG)
Catchweight 71kg Usman Nurmagomedov (RUS) v Jerry Kvarnstrom (FIN)
Featherweight title Lee Do-gyeom (KOR) v Alexandru Chitoran (ROU)
Lightweight title Bruno Machado (BRA) v Mike Santiago (USA)
German intelligence warnings
- 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
- 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
- 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250
Source: Federal Office for the Protection of the Constitution
more from Janine di Giovanni
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India squad for fourth and fifth Tests
Kohli (c), Dhawan, Rahul, Shaw, Pujara, Rahane (vc), Karun, Karthik (wk), Pant (wk), Ashwin, Jadeja, Pandya, Ishant, Shami, Umesh, Bumrah, Thakur, Vihari
UAE currency: the story behind the money in your pockets
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Ain Dubai in numbers
126: The length in metres of the legs supporting the structure
1 football pitch: The length of each permanent spoke is longer than a professional soccer pitch
16 A380 Airbuses: The equivalent weight of the wheel rim.
9,000 tonnes: The amount of steel used to construct the project.
5 tonnes: The weight of each permanent spoke that is holding the wheel rim in place
192: The amount of cable wires used to create the wheel. They measure a distance of 2,4000km in total, the equivalent of the distance between Dubai and Cairo.
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SERIE A FIXTURES
All times UAE ( 4 GMT)
Saturday
Roma v Udinese (5pm)
SPAL v Napoli (8pm)
Juventus v Torino (10.45pm)
Sunday
Sampdoria v AC Milan (2.30pm)
Inter Milan v Genoa (5pm)
Crotone v Benevento (5pm)
Verona v Lazio (5pm)
Cagliari v Chievo (5pm)
Sassuolo v Bologna (8pm)
Fiorentina v Atalanta (10.45pm)
THE BIO:
Favourite holiday destination: Thailand. I go every year and I’m obsessed with the fitness camps there.
Favourite book: Born to Run by Christopher McDougall. It’s an amazing story about barefoot running.
Favourite film: A League of their Own. I used to love watching it in my granny’s house when I was seven.
Personal motto: Believe it and you can achieve it.
Teaching in coronavirus times
Results
STAGE
1 . Filippo Ganna (Ineos) - 0:13:56
2. Stefan Bissegger (Education-Nippo) - 0:00:14
3. Mikkel Bjerg (UAE Team Emirates) - 0:00:21
4. Tadej Pogacar (UAE Team Emirates) - 0:00:24
5. Luis Leon Sanchez (Astana) - 0:00:30
GENERAL CLASSIFICATION
1. Tadej Pogacar (UAE Team Emirates) - 4:00:05
2. Joao Almeida (QuickStep) - 0:00:05
3. Mattia Cattaneo (QuickStep) - 0:00:18
4. Chris Harper (Jumbo-Visma) - 0:00:33
5. Adam Yates (Ineos) - 0:00:39
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David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
SPECS
Engine: 4-litre V8 twin-turbo
Power: 630hp
Torque: 850Nm
Transmission: 8-speed Tiptronic automatic
Price: From Dh599,000
On sale: Now
The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
