The figure climbed from 2.3% in March, with the ONS citing climbing air fares as the main contributor, as well as rising prices for clothing, vehicle excise duty and electricity. The upward contributions were partially offset by a fall in fuel prices.
“Exactly a year ago, inflation was at 0.3%, so this is the largest year on year increase in inflation since 2007,” said Chris Leyland, deputy chief investment officer at True Potential.
“Price rises on utility bills are starting to come through pushing up inflation for the month.”
Paul Mumford, manager of Cavendish Asset Management’s Opportunities, AIM and UK Select funds, said the rise presents “ideal conditions for a potential return to the cult of equity”.
“The rate of inflation could be forced even higher by the price of oil, as this may nudge upwards due to OPEC action this month – resulting in an even more compelling argument for equities,” he said.
Nick Dixon, investment director at Aegon, said: “Inflation has topped the Bank of England’s 2% target for the third month in a row, putting yet more pressure on policy makers to pull the lever on interest rates.
“The Fed has already raised the US central rate and, despite a downgraded growth forecast in the UK economy, it may only take a more stable outlook after the general election for the Bank of England to follow suit.
He added that rising prices will continue to trim the spending power of consumers, and so demands a review of investment strategies, especially for retirees who are often living on a fixed income.
“With bond yields unattractive, retired savers may be tempted to increase equity exposure, but equity valuations look toppy in a number of major markets,” he said.
“Staying diversified, while favouring low volatility equity dividends over capital returns, may be a more prudent approach.”
