UK Inflation Rises to 3.5% amid Reeves Tax Hikes in April

Inflation in the UK surged to 3.5% in April, its highest level in over a year, driven largely by Chancellor Rachel Reeves' tax hikes on employers, including increased National Insurance contributions and a rise in the national living wage. Energy bills also rose sharply due to a 6.4% increase in the energy price cap, while water bills and vehicle excise duty added further upward pressure on prices. The rise in inflation exceeded expectations and is straining household finances, with many analysts warning that these cost increases will likely lead to sustained inflationary pressures and could keep interest rates higher for longer. The Bank of England is monitoring the situation closely, with some forecasts suggesting inflation could peak around 3.6 to 3.7% before potentially easing later in the year. Meanwhile, concerns about government borrowing and fiscal policy persist, as rising debt interest payments could erode the Chancellor's fiscal headroom, prompting fears of further tax increases or spending cuts. Retailers and businesses are already feeling the impact of these rising costs, which are being passed on to consumers, contributing to the overall inflationary environment.