Much of the rise was due to the 6.4 percent rise in regulator Ofgem’s benchmark for household energy bills, which tracks international wholesale energy prices closely. However, other elements which contributed to the increase were entirely domestic affairs, such as water, where Labour has allowed a sharper-than-usual increase in bills to address high levels of pollution that it sees as a legacy problem inherited from the last Conservative government.
Ofgem’s seasonal adjustments have caused the headline rate of inflation to fluctuate sharply ever since the Russian full-sale invasion of Ukraine began three years ago. The Bank believes that it is steadily bringing it under control, and expects to keep cutting interest rates “gradually and cautiously” this year.
Even chief economist Huw Pill, who voted against the Monetary Policy Committee’s decision to cut the Bank Rate to 4.25 percent this month, said Tuesday that “the underlying disinflation process remains intact and … that the prospective path of Bank Rate from here is downward.”
