UK inflation eases to 2.8% on energy cap relief

UK inflation slowed to 2.8% in April, official data showed, as a reduction in the household energy price cap partially offset surging fuel costs linked to the Iran war.

The Office for National Statistics reported the consumer prices index fell from 3.3% in March, suggesting the conflict’s impact on British households has been less severe than initially feared.

Economists had forecast a decline to 3%, attributing the drop largely to Ofgem’s lower energy price cap, which cut the typical annual dual-fuel bill in Great Britain to £1,641 from £1,849 a year earlier.

Chancellor Rachel Reeves welcomed the easing, noting her November budget shifted some green energy costs from household bills to general taxation, helping to lower bills from April.

Water bills and vehicle excise duty rose less in April this year than in 2025, when both saw sharp increases, while an earlier Easter altered year-on-year comparisons for air fares and other seasonal prices.

However, economists warned the slowdown is likely temporary, with petrol and diesel prices climbing sharply since the start of the Middle East conflict and global oil prices exceeding $110 a barrel due to the closure of the strategic Strait of Hormuz.

Tuesday’s ONS data also showed wage growth slowing and unemployment rising in March, reducing pressure on the Bank of England to raise interest rates at its June 18 meeting.

Rate-setters at the Bank, who kept borrowing costs at 3.75% last month, must balance inflation control against economic activity but have signaled readiness to hike if price pressures persist.