Inflation jumps to 2.7% due to rising air fares, clothes and food prices
Disposible income will feel the squeeze as inflation jumps to 2.7% in April from 2.3% in March, the Office for National Statistics said.
HOUSEHOLD finances face a further squeeze as inflation hits its highest level since September 2013.
Figures from the Office for National Statistics (ONS) said that the Consumer Price Index (CPI) hit 2.7 per cent in April - up from 2.3 per cent in March.
The increase came from air fares, which jumped by 18.6 per cent month-on-month in April due to the impact of Easter holidays.
Airlines prices rise sharply around the Easter break, which fell on April 16 this year rather than March 27 in 2016.
The ONS said the timing of when shops put items on sale may have caused prices to jump, with the number of discounted items falling between March and April this year after rising slightly a year ago.
Food prices also became more expensive in April, rising 0.2 per cent month-on-month after coming in flat last year.
The way the ONS measures prices means Npower and Scottish Power's decision to increase gas and electricity prices in March also had an upward impact on the headline rate.
The overall price of electricity rose by 2.5 per cent month-on-month after falling by 0.2 per cent a year ago, but the rise was partly offset by a cap placed on prepayment meter charges.
Despite the price hikes from some utility companies, gas prices dropped by 0.6 per cent over the period.
The downward pressure on the cost of living came from fuel pump prices, with petrol falling by 1.8p to 117.4p per litre and diesel also dropping by 1.8p to 120.3p per litre.
WHAT HAPPENS WHEN INFLATION RISES?
PRICES will go up for most things - clothing, food, travel...the cost of living will get a bit more expensive.
These rises have been fuelled by the weak pound and it means those on the lowest incomes will be hit hardest.
Maike Currie, investment director for personal investing at Fidelity International said: “Inflation is a ‘Jekyll and Hyde’ character - while it may be good news for borrowers, as it erodes the value of their debts, it has detrimental implications for savers, investors and retirees, chipping away at the value of future interest and dividend payments and eroding the worth of their original capital."
The Consumer Price Index 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.
CPIH is the ONS's preferred measure of inflation, which includes costs associated with living in, maintaining and owning a home.
The Retail Price Index (RPI), a separate measure of inflation which includes council tax and mortgage interest payments, reached 3.5 per cent last month, up from 3.1 per cent in March.
Jo Darbyshire, commercial director at Avalon, said: “As inflation continues to climb and push up the cost of living, even the smartest of savers will start to feel the pinch.
“It has become increasingly common to hear of food, energy and our everyday essentials becoming more expensive.
“With inflation showing no signs of slowing down, it has never been more important to plan ahead so unexpected costs don’t hit as hard.”
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