Inflation eased to 2.8% in April, helped by lower energy costs and softer services inflation. However, rising fuel prices and higher factory costs suggest renewed pressure could be building for households and the Bank of England.
Experts are reacting to the latest figures below:
Danni Hewson, AJ Bell head of financial analysis, comments:
“With all the talk of rising prices some people might be scratching their heads that the headline inflation figure for April came in at just 2.8%, significantly down on where it landed in March.
“But this bright spot is set to be relegated to the past in the months to come. Inflation on motor fuels is already at the highest levels since September 2022 and input costs going into our factories hit 7.7% in April.
“Looking at the positive side of the equation, the biggest contributor to the fall in inflation in April came from the energy price cap which was calculated in the period before the Iran war began. The cap included measures announced by the chancellor in the Budget which helped deliver an average fall of £117 a year for dual fuel customers.
“That wasn’t the only downward pressure. Water bills rose but not by as much as April 2025, package holiday costs were down because these figures didn’t capture the easter holiday period, and overall service inflation cooled thanks to a sluggish labour market with limited wage bargaining powers.
“Last year businesses were also dealing with the double whammy of employer National Insurance rises and a chunky increase in the National Living Wage, which was much lower in 2026.
“That’s something that will be carefully monitored by Bank of England rate setters trying to keep their balance on the economic tightrope. They face a challenge that requires them to try and limit the secondary impact of rising prices whilst keeping one eye on sluggish economic growth and a lacklustre labour market.
“The IMF has stated that the UK’s central bank would be advisable to hold rates steady over the course of the year, and whilst markets aren’t convinced that will be the outcome, today the expectation is that rate hikes will be slower and fewer this year than had previously been priced in.
“On the negative side of today’s workbook, the price of energy is set to rise in July and again in October, increasing pressure on struggling families.
“With input costs going into factories already up along with import prices, the 2.4% rise in core CPI goods inflation is just the tip of the iceberg. Although the Bank of England’s worst-case scenario looks unlikely at the moment as Brent crude hovers around the $110 a barrel mark, inflation is still expected to surpass 4% by the end of the year.
“April’s 2.8% figure is positive, but inflation had been expected to fall to the Bank of England’s 2% target by this point in the year, a trend derailed by increased instability in the Middle East.
“The full impact of ‘Trumpflation’ as a result of the conflict will take months to be felt by consumers. However, resurgent nervousness about how budgets are likely to be impacted is making consumers reconsider their spending plans for the year. With any government intervention expected to be limited and targeted there is a danger of recession, even if it only ends up being a technical and short lived one.”
Luke Bartholomew, Deputy Chief Economist, at Aberdeen said;
“Inflation coming in softer than expected today will further take the pressure off the Bank of England to hike rates over the next few meetings. But we are most certainly not out of the woods in terms of the impact of the Iran conflict on inflation. Ironically, this is probably the month inflation would have been back at the 2% target were it not for the Iran war. Instead, headline inflation will pick-up again in coming months, especially after the next energy price cap re-set in July. So as inflation climbs back towards 3.5% later this year, the question of interest rate hikes will remain pressing. But on balance, we think the weakness of the economy, and the labour market in particular, will stay the Bank’s hand, with rates remaining on hold even as inflation pressures remain elevated.”
Mike Ambery, Retirement Savings Director at Standard Life plc said:
“Today’s inflation figure of 2.8% shows some welcome easing, with inflation falling from 3.3% in March. However, with inflation still above the Bank of England’s 2% target, the overall picture remains uncertain and pressures have by no means disappeared.
“While a lower reading offers some immediate reassurance, there are signs inflation could pick up again through the summer. Rising global energy costs, driven by war in the Middle East, are expected to feed through into a higher Ofgem price cap from 1st July – pushing household bills back up and highlighting just how uneven the path back to target could be. At the same time, the recent easing may partly reflect more cautious consumers, who have held back on spending amid uncertainty in recent months.
“With inflationary risks ahead, the Bank of England is likely to take a cautious approach to interest rates. That could mean borrowing costs remain higher for longer, and we’re already seeing some mortgage rates edge up despite the Bank holding rates steady. While that will add further pressure for borrowers, there is some more positive news for savers, who may continue to benefit from relatively high returns on cash in the near term if they shop around for the best rates.
“For those approaching or in retirement, this environment presents a mixed picture. Expectations of higher interest rates have supported more attractive annuity rates, potentially boosting the level of guaranteed income available. However, with prices still unpredictable and the risk that inflation continues to chip away at spending power, having a clear plan for how you’ll turn your savings into a reliable and sustainable income – and reviewing it regularly – is key to staying on track and maintaining financial confidence in retirement.”
Lindsay James, investment strategist at Quilter:
“Inflation in the UK eased considerably to 2.8% year on year in April, down from 3.3% in March in a positive sign for the government. While still comfortably above the Bank of England’s 2% target, there is some comfort for consumers that the energy price cap fell 7% in April as costs relating to renewable energy support mechanisms moved from domestic energy bills to general taxation. While this respite is clearly welcomed, it will be short lived as the energy price cap is expected to rise nearly 13% in July as higher underlying energy costs, caused by Donald Trump’s decision to again attack Iran, are included in the next calculation. It was also noted that motor fuel saw a large increase, underscoring the potential threats that still lurk for consumers and businesses and thus we should prepare for this month to be an outlier and inflation to spike once more.
“The price of gas for future delivery has risen around 50% in the past 12 months as the ongoing shutdown of the Strait of Hormuz is leaving reserves under increasing pressure and sharply increasing costs of fertiliser, something which heavily relies on gas for the production of nitrogen as well as other key chemical inputs. This is already creating problems for the agricultural sector and impacting food prices, with food inflation still coming in at 3% albeit down from the previous month, but this is likely to worsen in coming months without a swift agreement.
“However, it is not all a one-way street. Whilst supply chains are again being disrupted, rising unemployment is creating a headwind for wage growth, dampening the impact on the large services sector. Whilst yesterday’s painful labour stats were an unwelcome development in the overall health of the UK economy, it may limit the number of rate rises that will be needed to anchor long term inflation expectations. That said, even if interest rate rises are not delivered, the recent spike in government bond yields, factoring in not only the risk of higher prices but also political risks, is already pushing up borrowing costs for many. The squeeze on household finances looks set to continue, making any sort of growth in the second half of the year harder to come by.”
Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said:
“Locking in savings rates has not shielded households from inflation, and savers who locked into a five-year term in May 2021 at a top rate of 1.40% may have exposed themselves to significant real-term losses. During that time, a £10,000 deposit would now be worth around a modest £10,700, however, with average inflation at around 4.6% per year, its purchasing power would’ve been drastically eroded. In today’s terms, the real value of the investment falls to around £8,600, equating to a real-term loss of around £1,400 over five years.
“While savings rates now sit far higher than in the ultra-low era, and as the top rates are moving in a positive direction, it remains crucial for savers to focus on true value instead of attractive headline rates. The Bank of England’s worst-case scenario projects inflation to reach 5.6% in Q2 of 2027. This runs the risk that even with today’s higher savings rates, returns may still lag if price shocks persist. To avoid the same fate of inflation-battered returns, savers need to take a more proactive approach by reviewing deals frequently, making use of their tax-free cash ISA wrappers and avoiding apathy with long standing accounts that pay below average returns.”
Samuel Fuller, Director of Financial Markets Online, commented:
“This is a mike drop moment. The inflationary tidal wave many had been expecting appears to have just melted away, and with them some of the fears about looming interest rate rises.
“But before anyone breaks out the champagne, it’s worth remembering there are several statistical reasons for the decline in the headline inflation numbers. April 2025 saw a big jump in the cost of several regulated services like water and electricity, meaning this April’s numbers are flattered by comparison.
“This might explain why the month-on-month jump in prices was 1.2% last April, but just 0.7% this April.
“But it doesn’t explain the price falls seen in other areas. Air fares soared by 10% in March, but fell by 3.3% in April as jet fuel prices began to settle and carriers began cutting prices to recoup lost business.
“Annual food inflation has cooled too, down from 3.7% in March to 3% in April. Most importantly of all, core inflation – which strips out volatile factors like food and fuel – fell from 3.1% in March to 2.5% in April – its lowest annual level in nearly five years.
“The UK’s CPI is now lower than Germany’s for the first time since December 2024, and there is plenty here for the Government to celebrate.
“But the inflationary threat from the war in the Gulf hasn’t disappeared. Fuel price inflation is still running red hot, and motor fuel prices rose by 23% in the 12 months to April, up from the rise of 4.9% seen in the 12 months to March.
“Nevertheless there is sufficient upside surprise in this data for the Bank of England to hold off on any immediate increase in interest rates.
“This has caused the Pound to dip on the currency markets and is likely be welcomed by equity markets.
“Above all, it’s fantastic news for anyone due to remortgage or thinking of buying their first home in the coming months. The prospect of interest rate rises has not gone away, but it may be delayed.”
Susannah Streeter, chief investment strategist, Wealth Club, said:
“Despite the fall in inflation in April, the UK still appears stuck in a 1970s-style economic backdrop of energy insecurity, persistent price pressures and growing political intervention in markets. The softer-than-expected inflation reading will come as welcome relief to policymakers and households, but concerns remain that higher energy costs and geopolitical tensions could yet feed through into prices in the months ahead.
The reduction in the energy price cap in April was a key driver behind the slowdown in inflation, while food price pressures also eased. But with the Middle East crisis unresolved and energy markets remaining highly volatile, households and businesses are not out of the woods. Forecourt prices remain elevated, with motor fuels providing the biggest upward contribution to inflation, keeping the headline rate above the Bank of England’s target.
This snapshot shows the UK economy is still wrestling with the repercussions of a prolonged energy shock. There are also signs retailers are finding less room to cushion consumers from rising costs. Clothing prices remained firmer, with fewer discounts offered compared with the same period last year, indicating that businesses facing higher payroll costs, elevated business rates and lingering energy pressures are becoming less willing or able to absorb rising expenses. It’s amid this backdrop that government calls for price controls are straining an already fraught relationship with the supermarket sector. While ministers may be desperate to limit further pressure on households, price caps risk distorting markets and storing up inflationary pressures for later. Like a coiled spring, prices could rebound sharply once restrictions are eventually removed. The easing in food inflation during April also underlines how fiercely competitive the grocery sector already is, leaving little room for retailers to artificially suppress prices further.
Clearly the energy crunch has rattled the UK government, which is already reeling from political infighting prompted by a poor showing in local elections. The determination to keep a lid on prices and limit broader economic fallout is also likely to be behind the decision to loosen strict sanctions on Russian oil refined into diesel and jet fuel. The UK government clearly sees the energy crunch as the bigger foe right now and that outweighs the political optics of softening parts of the sanctions regime. This change will allow refiners in intermediary processing and exporting nations to use Russian crude before selling fuel onto international markets, where UK buyers can then import it under the temporary waiver rules.
This is set to ease pressure on airlines, which until very recently feared jet fuel shortages could disrupt summer schedules. Jet fuel prices monitored by IATA show they fell by 13.72% in the week ending May 15 compared with the previous month’s average. This action could prompt a further modest decline in the coming weeks.
Some sanctions on the transport of Russian liquefied natural gas have also been lifted. But energy markets remain highly strained given the continuing diplomatic impasse over Iran. Crude oil remains above $110 a barrel amid President Trump’s threat to resume strikes unless Tehran agrees to US peace proposals. Until the Strait of Hormuz fully reopens and regional tensions ease, energy markets are likely to remain volatile, keeping governments, businesses and consumers under sustained financial pressure.”
George Lagarias, Chief Economist at Forvis Mazars comments:
“Yet another welcome surprise this week for the UK economy. After the IMF’s growth upgrade, came an inflation drop. UK inflation fell from 3.3% in March to 2.8% in April, 0.2% lower than economists expected. More importantly, looking at the figures, we see evidence of so-called “demand destruction”, i.e. a preference to reduce demand for items that have been inflated. So, while energy prices rise, consumers have cut down on some items, possibly preventing further inflation jumps.
“Considering China’s public admonition to end hostilities in the Middle East yesterday, the geopolitical endgame could be closer, possibly allowing the UK economy to enter a post-Hormuz era without entrenched inflation.”
Scott Gardner, investment strategist at J.P. Morgan Personal Investing said:
“The fall in UK inflation during April was better than expected but it shouldn’t mask the underlying price pressures in the economy. Services inflation in particular has dropped significantly, largely because the hikes to National Insurance and minimum wages we saw last April were not repeated on the same scale this year.
“While this is welcome progress, the month-on-month data arguably offers a clearer read on the UK prices. The spike in energy costs since the war in Iran broke out continues to persist and is being felt harshly by households and businesses. As a result of this, there has been a jump in input prices across both manufacturing and services industries. While some costs have been absorbed by firms, output prices have increased.
“This mixed picture underscores the challenge for the Bank of England and policymakers. Energy and food inflation remains sticky even as services inflation and wage growth shows signs of cooling. This challenge is being compounded by an uncertain geopolitical backdrop in the Strait of Hormuz with the conflict’s inflationary impact starting to be felt beyond energy price rises. Markets are currently expecting two rate hikes later this year but there are too many unknowns right now, making any decision on future rate moves far from clear cut just yet.”
Kevin Brown, savings expert at Scottish Friendly, has commented on this morning’s inflation data from the ONS:
“At first glance, April’s surprising inflation reading of 2.8 per cent looks like welcome progress. Yet it should not be taken as a sign that the UK has somehow weathered with resilience the inflationary fallout from the conflict in the Middle East.
“A large reason why inflation eased in April is that the energy price cap was reset lower before the recent surge in oil and gas prices fully fed through to households. When the cap is updated again in July, it is likely to reflect more of the increase in wholesale energy costs that motorists have already experienced at the petrol pumps.
“Today’s figure is unlikely to provide comfort to the Bank of England that inflation pressures are back under control. Another inflation reading is still to come before policymakers next meet in June, which should provide a clearer picture of underlying price pressures ahead of the Bank’s next rate decision.
“If living costs continue to rise over the summer – especially as wage growth slows – many households could find themselves under renewed financial pressure. For those able to take a longer-term view, investing can play an important role in helping preserve and grow wealth over time.”
Emma Hollingworth, Chief Distribution Officer at LSL Financial Services, has commented:
“Falling inflation is both welcome and slightly surprising, but we don’t believe that this will in any way alter the Bank of England’s thinking when it comes to interest rates.
“The central bank is walking a tightrope. If it does nothing, inflation risks becoming entrenched. But raising rates now would deflate an economy that outperformed all expectations in the first quarter and would heap pressure onto a struggling labour market.
“Barring a significant deterioration in the Middle East, we believe the Bank will keep its powder dry this year with regards to interest rates. Rates have already increased significantly, leaving borrowers confused about what to do next and when to act. Brokers who are being proactive with their clients now are the ones who will help them walk away with the best possible solution for their circumstances.”
Adam Gillespie, Head of DB Trustee Investment at XPS commented:
“Today’s fall in CPI inflation to 2.9% or below was greater than market expectations, despite the Middle East tensions keeping investors alert to fresh shocks in oil and shipping, suggesting that domestic disinflationary forces are having a greater impact for now.
A key driver of the lower figure is the April change to Ofgem’s energy price cap, which reduced household bills and pulled down CPI via lower gas and electricity costs, but stripping out that effect, underlying inflationary pressures may not be easing as quickly as the headline suggests.
The news for DB scheme funding is more positive, driven far more by movements in the gilt market than by any single monthly CPI print. According to our XPS DB:UK analysis, aggregate surplus remains well above £200 billion.
Gilt yields have risen sharply in recent months and investors remain highly sensitive to the risk of sticky UK inflation and the country’s reliance on imported energy – a combination that is helping to keep UK government borrowing costs among the highest in the developed world.
Attention will now turn to Labour’s internal politics and whether any shift in fiscal policy could force markets to reprice both inflation and gilt yields higher. Trustees and sponsors should be alert to these risks and ensure that their hedging strategies have not been knocked off course by the sizeable market moves we have already seen or by further volatility in the months ahead.”
Anna Macdonald, Investment Strategy Director, Hargreaves Lansdown:
“UK inflation fell more than expected to 2.8% in April, below forecasts of 3%. Some temporary factors helped pull the number down – including changes to the Ofgem price cap and the timing of Easter. Even so, combined with a softening labour market, this gives the Bank of England a bit more breathing space.
It’s worth remembering that before the escalation in tensions between the US, Iran and Israel, investors had been expecting two rate cuts this year. Markets are now leaning towards the possibility of one or two rises instead. However, Bank of England Deputy Governor Sarah Breeden struck a more measured tone in the Financial Times this week, emphasising that the Bank’s role is to create a “stable environment” rather than act in a “trigger-happy” way. As she put it: “We don’t need to rush… we’re in a good place to be able to watch what’s happening in the economy.”
