Interest rate expectations in the UK are tempered by rising inflation and economic uncertainty. After a drop in interest rates in early 2023, concerns are rising again as inflation ticked up from 2.5% to 3%. Analysts warn that increased household costs, such as water and energy bills, driven by national insurance and living wage hikes, could further propel inflation beyond the targets set by the Bank of England. The economic impact of international trade policies adds to the uncertainty surrounding the inflation forecast for the year ahead.
Inflation is now one per cent away from target and heading in the wrong direction, and consumers better buckle up for prices to trend higher throughout this year.
The Bank of England reckons inflation will hit 3.7 per cent in the third quarter, and that's without a potential tariff shock stemming from US trade policy.
From April, the national average household water bill will increase by 123 a year to 603, a considerable uptick of 26 per cent, and the cap on energy bills is expected to rise in the same month.
Tuesday's announcement shows the cost for the average household being an additional 9.25 a month for energy.
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