Inflation rises to 3.5%

Inflation jumped to 3.5% in April, up from 2.6% in March.

This is the highest level since February last year and was driven by last month’s increase in energy and water bills.

What is inflation?

Inflation is a measure of how fast prices are going up.

The Office for National Statistics measures inflation by tracking the prices of hundreds of everyday items in an imaginary shopping basket. 

So the headline inflation figure will show how much the price of this shopping basket has gone up.

But it’s important to note that if inflation falls, it doesn’t mean prices are falling too.

It just means they’re not going up as quickly.

What does inflation mean for your money?

If prices are going up, you need more money to buy the same goods and services.

The government has set the Bank of England (BoE) a target of 2% inflation.

So when inflation gets too high, the BoE can raise interest rates to bring it back under control and closer to its target.

This base rate influences the interest rates offered by banks and lenders.

A rate increase makes borrowing more expensive and people will have less money to spend elsewhere.

And that means demand falls, slowing price increases and helping inflation go down.

But if inflation is too low, the BoE may cut interest rates to make borrowing cheaper, encourage spending and drive economic growth.

Earlier this month, the Bank of England cut interest rates by a quarter of a percentage point to 4.25%.

This was the second rate cut this year and the fourth time they’ve been reduced since they peaked at 5.25% last year.