Inflation in the UK rose by 3.5% last month - the highest interest rate in more than a year, following a sharp increase in water fees, energy costs and council taxes.

The increase in employers' national insurance contributions and the increase in national minimum wages also puts pressure on companies to raise prices rather than city analysts' forecasts.

It is powered by reports of gasoline, electricity, water and shipping bills, part of a series of rising household costs that led to what was called "The Terrible April" last month.

A spokesman for ONS said: "The sharp increase in household bills has led to a sharp rise in inflation. Natural gas and electricity bills have risen this month due to changes in OFGEM energy price ceilings, while gasoline and electricity bills have increased compared to the same period last year."

They added that there were also strong growth in water and vehicle excise tax this year, "all of which raised the title rate to its highest level since the beginning of last year".

Since January 2024, the rise in the Consumer Price Index recorded by the Office of Statistics (ONS) is the highest level after falling to 2.6% in March in the first few months of the year.

The Bank of England may refuse to demand faster, deeper reductions in interest rates after prices rise, proving to be stronger than financial markets expect.

A poll of urban economists predicts growth of 3.3% in April, while central banks expect inflation to reach 3.4% last month.

Monica George Michail, an economist at the National Institute of Economics and Social Research, said inflation could last for several months, forcing central banks to delay interest rates.

“Businesses are experiencing cost pressures in a country’s minimum/living wages, employers’ national insurance contributions, and the increase in regulatory prices. Some of these costs will be passed on to consumers through higher prices,” she said.

“So we expect the Bank of England to lower only one lower interest rate this year.”

Business groups say they are disappointed that interest rate cuts may be delayed. The British Chamber of Commerce (BCC) said the rise in cost pressures and higher household bills mean that businesses are facing "a perfect storm".

“Despite the April jump, the size has dropped to 3.5%," the group said. "With national insurance rate hikes, rising minimum wages and global tariffs, our research shows that 55% of businesses expect to raise prices in the coming months."

Financial markets respond by lowering their forecasts of rising interest rates. The bank's meetings of the Monetary Policy Committee in June and August are not expected to lower interest rates, and will lower the next cut, most likely from 4.25% to 4% to September.

The decline in oil prices lowered the rise in April, which lowered the costs of gasoline and diesel, while massive discounts on children's clothing and women's footwear limit the rise in clothing costs.

Latest energy price forecasts show that they drop, lowering the energy cap prices. Some analysts say this trend should limit the potential increase in inflation this year.

The Bank of England predicts that inflation will average 3.5% early this month, summer and fall.

Central Bank officials lowered interest rates by a quarter at their last meeting on May 8, but the 9-member monetary policy committee voted in three ways, with two members voting to pass the shelve interest rates, while the other two supported a half-point reduction.

Rachel Reeves said she was "disappointed" by inflation data. “I know the cost of life stress is still pushing down workers.

The Prime Minister added: “We are far from the double-digit inflation we saw in the last administration, but I’m sure we’re going further and putting more money in people’s pockets faster.

"The news of rising inflation this morning - now well above the 2% target - is worried about families," said Shadow Secretary Mel Stride.

"Labor's economic mismanagement is driving the cost of living for families - in addition to the £3,500 attacks from the Prime Minister's damage to the work tax. Higher inflation may also mean longer interest rates to keep higher interest rates for longer periods of time, struggling to beat household finances...families also pay the price for the choices chosen by the Prime Minister."