A specialist mortgage lender is warning that the higher-than-expected leap in inflation may trigger a rise – not a fall – in interest rates.

The headline UK inflation rate jumped to 3.5% in the year to April, its highest level since February 2014, the Office for National Statistics says.

Services inflation – influenced by factors such as wages and employment costs in a range of sectors including education, hospitality and entertainment – rose from 4.7% to 5.4% in the year to April, when higher National Insurance Contributions by employers came into force and the minimum wage increased.

Peter Stimson, director of mortgages at MPowered, claims this is worse than expected. He says:“The surge in inflationary pressure won’t just translate into a slowdown in base rate cuts. We’re in ‘handbrake on’ territory.

“The prospect of the Bank of England reducing its Base Rate again in June has shifted from slim to non-existent.

“With the economy starting to expand at a decent clip, the Bank is now less concerned about stimulating growth. Getting inflation under control, and forcing it back down towards its 2% CPI target, is once again the Bank’s top priority.

“It will have its work cut out, as there are some worrying trends below the surface of today’s inflationary numbers. And while a number of temporary factors make April’s spike look particularly bad, no-one should expect inflation to return to target by itself.”

Not every analyst has ruled out a base rate cut next month, although most accept it’s no longer a dead cert.

Sarah Coles of business consultancy Hargreaves Lansdown comments: “While price rises look alarming, it won’t necessarily be setting off the alarm bells for the Bank of England. It has been predicting a spike for some time. It also expects inflation to remain relatively high for a period. 

“Much of this has already been factored into its calculations when it decided to cut rates last month. It means these figures alone are unlikely to spark a dramatic rethink by the Bank.

“However, the latest twists and turns in the Trump tariffs drama mean some of the growing concerns about a global slowdown have eased very slightly. 

“Speculation over this possibility is what has caused the market to price in just one or possibly two more rate cuts in 2025 – where previously it had expected more. 

“Yet with so much uncertainty over what happens next with tariffs, there’s enough concern over global growth for lower interest rates to still be on the cards this year.”