UK inflation slowed to 2.8% in April, according to official figures, as a reduction in the household energy price cap helped offset the sharp rise in fuel costs since the start of the Iran war. The Office for National Statistics (ONS) reported that the consumer prices index measure of inflation eased from March’s reading of 3.3%, suggesting the impact of the Iran war has not yet hit UK households as much as feared.
The reading beat economists’ forecasts of a decline to 3%. The fall was partly due to Ofgem’s lower energy price cap, which reduced the typical annual dual-fuel bill in Great Britain to £1,641 from April compared with £1,849 a year earlier.
Grant Fitzner, the chief economist at the ONS, said: “There was a notable fall in annual inflation led by lower electricity and gas prices. This was due to the government’s energy bill support package reducing variable and fixed tariffs, along with lower global wholesale energy prices before the conflict in the Middle East, which fed through to the reduction in the Ofgem cap.”
The slowdown in inflation will be welcome news for Chancellor Rachel Reeves, after she shifted some green energy costs away from household bills and into general taxation in her November budget to help ensure bills fell from April. Water bills and vehicle excise duty also increased by less in April this year compared with 2025, while the early Easter affected prices such as package holidays and air fares, which fell by 3.3% in April compared with a rise of 27.5% a year earlier.
Reeves said: “The war in Iran is not our war but one we will need to respond to, and the decisions I took in the budget last year have kept inflation down as we deal with global instability. We have the right economic plan, and to change course now would risk our economic stability and leave working people worse off.” She added that the government has already taken £117 off energy bills, frozen rail fares, and lifted the two-child limit.
However, economists believe the drop in inflation is unlikely to last as petrol and diesel prices have soared since the start of the Middle East conflict, reflecting a jump in the global oil price to more than $110 a barrel due to the closure of the critical Strait of Hormuz affecting energy supplies. Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales, described April’s slowdown as “a last interlude before the Iran war-induced inflation storm hits,” predicting inflation could rise to 4% this summer.
The ONS reported a 23% rise in motor fuel prices in the year to April compared with a 4.9% rise in the year to March. On a monthly basis, inflation rose by 0.7% in April, the same level as March. Core inflation, which strips out volatile measures like energy and food, fell to 2.5% from 3.1% in March.
The drop in inflation comes after ONS data on Tuesday showed wage growth slowed and unemployment rose in March. These figures are likely to reduce the likelihood of the Bank of England raising interest rates at its next meeting on 18 June. Rate-setters must balance containing inflation with not denting economic activity; the Bank held rates at 3.75% last month but said it could raise borrowing costs if inflation continues to rise. Martin Beck, chief economist at WPI Strategy, said: “A prolonged pause from the BoE now looks the most plausible outcome, with the economy hostage to events in the Middle East and their impact on energy prices.”
