April 2025 Inflation Outlook
- Thowsif Mukit
- Apr 25
- 3 min read
Updated: Oct 3
April 2025 marks the start of a new tax year, but the bigger story for most people is the ongoing strain from rising prices. Inflation, while down from its 2022 peaks, continues to sit above the Bank of England’s 2% target. This makes everyday costs higher than expected and puts pressure on families and businesses trying to plan ahead.
Understanding the UK’s current inflation outlook is key to preparing for the months ahead.
Inflation Outlook
Recent data shows inflation averaging around 3–3.5% this spring. Energy prices remain a key driver, with adjustments to the April energy cap adding to household bills. Rents and housing costs continue to climb, and wage growth in several sectors is feeding into higher service prices.
The Office for Budget Responsibility expects inflation to stay elevated through the middle of 2025 before gradually easing in 2026. However, risks remain - including global energy markets, supply chain pressures, and regulated charges such as council tax rising faster than expected.
The Bank of England’s stance reflects these uncertainties. Policymakers have signalled that while inflation should fall eventually, they are not yet ready to cut interest rates aggressively.
How it impacts you
For households, inflation in April 2025 means that essentials such as food, energy and transport continue to take up a larger share of income. Families are finding it harder to put money aside for savings or holidays, as more of their budget is consumed by unavoidable expenses. This creates added financial stress and leaves less flexibility to deal with unexpected costs.
For small businesses, inflation presents a double challenge. On one hand, the cost of materials, utilities and staff wages has increased. On the other hand, many business owners are reluctant to pass these costs directly to customers for fear of losing them in a competitive market. This results in shrinking profit margins and forces many to rethink their pricing strategies and efficiency measures.
Contractors and freelancers are particularly exposed. Their income often fluctuates from month to month, making it difficult to cope with consistently higher living costs. When everyday expenses climb but income remains unpredictable, financial planning becomes far more difficult.
Borrowers and mortgage-holders also feel the strain. Because interest rates are being kept higher for longer in order to tackle inflation, monthly repayments on loans, mortgages and overdrafts remain elevated. This makes it more expensive to borrow money for both personal and business purposes, adding to the financial squeeze.
Even savers are not immune. If the interest paid on savings accounts lags behind inflation, the real value of money held in cash falls over time. While balances may appear to be growing, purchasing power quietly declines, making it harder to achieve long-term goals such as retirement planning or property investment.
What you can do
The most effective step households and businesses can take in the current environment is to budget with realism. By recognising that essentials will continue to cost more, you can adjust spending habits now and avoid financial surprises later in the year. For families, this may mean trimming discretionary spending and setting aside a small emergency buffer to absorb higher bills.
Small businesses should consider strategic pricing reviews. Instead of large, sudden increases, gradual adjustments paired with transparent communication to customers can help maintain trust while preserving margins. Businesses can also review supplier contracts, renegotiate terms, or explore new suppliers who may offer better value.
Fixing costs where possible is another practical move. For example, securing a fixed-rate energy or finance deal provides certainty and shields you from potential future rises. Similarly, reviewing borrowing structures - such as switching from a variable loan to a fixed-rate arrangement - can reduce exposure to further rate hikes.
Savers should look to optimise returns by moving money into higher-yield accounts or tax-efficient products such as ISAs. Even a small increase in interest can help offset the erosion caused by inflation. For those with investment portfolios, considering a reallocation towards inflation-linked assets may also help protect long-term value.
Finally, it is important to stay informed and seek advice. Inflation is volatile and forecasts can shift quickly. At Ledgr Accountants, we work with clients to forecast cashflow under different inflation scenarios, stress-test financial plans, and identify practical steps tailored to their circumstances. The goal is to reduce uncertainty and give clients confidence, even when the economic backdrop is challenging.
Thowsif Mukit
Commercial Manager
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