Water bills rose by an average of 26 percent nationwide at the start of April, while regulated household energy bills rose 6.4 percent and council tax bills rose by between 5 percent and 10 percent.
All that is likely to stop any further improvement in services inflation, which has been the BoE’s bugbear for the last couple of years. Despite easing in recent months, it still stood at 4.7 percent in March.
However, the clinching factor for the Bank may be the pound: Since the U.S. tariff dump, it has defied expectations of fresh declines, rising 4.5 percent against the dollar. That is helping to keep the cost of key imports down — especially oil.
Crude oil prices have fallen to four-year lows even in dollar terms, due to a combination of weak global demand and a big rise in output from OPEC and its allies, scheduled for June.
Silver linings
Fortunately for the Bank, economic data since the start of the year has generally surprised on the upside after effectively stagnating for the last two quarters.
Strong February and preliminary March figures point to growth of more than double the MPC’s forecast of 0.1 percent in the first quarter, Deutsche’s Raja.
There’s good news on the labor market front as well. Wage growth has been falling faster than the Bank expected, but without any dramatic uptick in redundancies.
“[W]hile the jobs market is getting cooler, we’re not seeing any of the classic warning signs you’d normally start to see in a recession,” wrote James Smith, an economist at Dutch bank ING.
