What happened
UK consumer price inflation held steady at 2.8 percent, unchanged from the previous reading. However, independent forecasters surveyed by the Treasury expect inflation to rise to around 3.5 percent by the final quarter of the year, driven largely by higher energy costs.
Why it matters
Inflation measures how fast the cost of everyday life is rising. A move back toward 3.7 percent would take prices further above the Bank of England target of 2 percent, complicating any hope of interest rate cuts and squeezing household budgets.
Explained simply
Inflation is like a slow leak in the value of the money in your pocket. At 2.8 percent the leak is steady, but the forecasters are warning that the energy price cap rising and the end of a temporary bill discount will make the hole a little bigger this autumn. The same ten pound note simply buys less as time goes on.
What it means for you
If inflation climbs, cash sitting in a low interest account loses real value faster, so it is worth making sure savings are in accounts that at least match inflation, such as competitive fixed rate bonds or cash ISAs. Households should also budget for higher energy bills from July onward.
