The rate of UK inflation has risen for the first time in 10 months, as higher petrol prices pushed the consumer prices index (CPI) to 1.8% in April, up from 1.6% in March.
Figures from the Office for National Statistics show higher transport prices due to the late timing of Easter this year are behind the bigger-than-expected rise. A jump in clothing and footwear prices was another contributor to the rise.
The increase in the inflation rate means that the cost of living is once again rising more quickly than wages. However, inflation has stayed below the Bank of England’s 2% target for the fourth month in a row.
Last week Bank of England governor Mark Carney said he expected the rate of inflation to remain below the 2% target for the next two years.
The rise in the inflation rate means basic rate taxpayers would need to find a savings account paying 2.25% a year to beat inflation, while a higher rate taxpayer would need one paying at least 3% each year, according to comparison site Moneyfacts.
This is very difficult to achieve from a deposit account in the current low interest climate. If you would like to know how you can make your money work harder for you then contact us>>