Energy bill hikes push inflation to highest level this year

Increased household energy bills pushed the rate of inflation to its highest level this year in April - rising to 2.1%.

The Office for National Statistics (ONS) said the increase - from a rate of 1.9% in March - was mostly the result of a higher energy price cap on default tariffs, set by the regulator Ofgem, coming into force.

Electricity and gas prices rose 10.9% and 9.3% respectively between March and April.

The ONS also cited the timing of Easter, as the cost of air and ferry tickets soared, and rising fuel costs.

However, there was a downward effect from hotels as costs rose by less than a year ago.

The largest downward contribution came from the volatile computer games category.

The headline figure for the Consumer Prices Index, while higher and just above the Bank of England's 2% target, came in below the expectations of economists.

Ben Brettell, senior economist at Hargreaves Lansdown, responded: "Higher inflation would usually bring pressure on the central bank to raise interest rates - but these are far from normal times.

"The MPC [Monetary Policy Committee] is rightly reluctant to tweak policy while Brexit hangs over the economy like the Sword of Damocles.

"Moreover, fuel and energy prices are notoriously volatile from month to month, and are usually led by factors outside the control of domestic monetary policy.

"I'd expect the headline rate to fall back as we move through 2019.

"Core inflation, which strips out these volatile components, remained unchanged at 1.8%. So today's data changes little - the absence of domestic inflationary pressure means policymakers have licence to leave rates on hold for now.

"This was borne out in the market reaction, with sterling little changed on the news. This muted response shows traders haven't adjusted their prediction that the Bank of England's wait-and-see approach will hold firm at its next meeting on 20 June."