UK inflation surprised to the upside in April, with headline CPI (consumer price index) rising to 3.5% year-on-year. Well above March's 2.6% and surpassing consensus expectations of 3.3%. The surprise stemmed largely from a combination of regulated price increases across energy, water, and a rise in employer National Insurance contributions, as well as a hike in the minimum wage. Core inflation, which strips out the usually volatile food and energy numbers, also rose from 3.4% to 3.8%, while services inflation surged to 5.4%, driven primarily by a 6% increase in the household energy price cap. Despite this sharp acceleration, the Bank of England had anticipated a near-similar outcome, projecting a rate of 3.4%. In fact, the BoE and market consensus still foresee moderating inflation in the months ahead, aided by easing energy costs, a stronger pound, softer import prices, and slack in the labour market.