Annual inflation in the United Kingdom eased to 2.8% in April, according to preliminary figures from the Office for National Statistics released on Wednesday. This marks a decline from the 3.3% rate reported in March and shows price growth slowing faster than many analysts anticipated.
A major factor behind the slowdown was the revised energy price cap. The energy regulator, Ofgem, lowered the typical annual dual-fuel bill for households in Great Britain to GBP 1,641 in April, down from GBP 1,849 in the previous year. The adjustment in energy bills contributed to headline inflation dropping below the 3% rate forecast by economists.
While April’s easing suggests that the effects of the Iran war have not yet significantly impacted U.K. consumers, analysts warn of potential future price pressures. Instability in the Middle East has driven oil prices above $110 per barrel, following disruptions around the strait of Hormuz, which could push fuel costs—and, in turn, inflation—higher in the coming months.
The government has been criticized for its response to rising energy expenses, specifically for not pursuing more domestic oil and gas production in the North Sea and for its handling of support measures. Chancellor Rachel Reeves recently moved some green energy charges from consumer bills to general taxation, a shift announced in the November budget which helped decrease household costs from April.
The Bank of England remains focused on inflation dynamics, including potential wage increases and price-setting by businesses, and has indicated it is prepared to adjust interest rates if necessary. However, with separate ONS data recorded on Tuesday showing slowing wage growth and a rise in unemployment for March, the latest inflation reading may reduce the likelihood of an interest rate hike at the central bank’s upcoming meeting on June 18.
