UK Inflation Slows to 2.8% Amid Energy Price Cap Softening Impact of Rising Fuel Costs
The Office for National Statistics (ONS) announced that UK inflation slowed to 2.8% in April, the lowest rate in more than a year, as a reduction in the household energy price cap helped soften the sharp rise in fuel costs since the start of the Iran war.
The consumer prices index measure of inflation eased from March’s reading of 3.3%, suggesting that the impact of the Iran war has not yet hit UK households as much as feared, despite prices at the pumps rising at the fastest rate in nearly four years. The reading beat economists’ forecasts of a decline to 3% and was the lowest rate since March 2025.
Energy Price Cap Reduction Contributes to Inflation Slowdown
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 – a fall of £117. Electricity prices dropped 8.4% in April, according to the ONS.
Chancellor’s Budget Decisions Help Keep Inflation Down
The slowdown in the pace of price rises will be welcome news for the 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 a lower price cap. Reeves is due to announce a package of measures on the cost of living on Thursday, including an expected cancellation of this autumn’s rise in fuel duty.
Services Inflation Hits Lowest Rate Since January 2022
Services inflation, which is considered a key sign of underlying price pressures, was 3.2%, the lowest since January 2022. Water bills and vehicle excise duty increased by less in April this year compared with 2025, when they both rose sharply. Prices such as package holidays as well as air fares fell by 3.3%.
Economists Warn of Inflation Surge Ahead
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 as the closure of the strait of Hormuz affects energy supplies. The household energy price cap, which is updated on a quarterly basis, will change in July and is forecast to jump 13% to £1,850 a year.
Producer Price Inflation Hits Highest Rate Since March 2023
Producer price inflation, which measures the change in the price of goods bought and sold by UK manufacturers, was 7.7% in April, up from a revised rate of 5.3% in March. This was the sharpest increase in prices since March 2023, when the UK was suffering from double-digit rises in inflation each month, and raises fear of higher inflation for shoppers down the line as companies pass on costs to consumers.
The overall drop in the inflation rate comes after ONS data released on Tuesday showed wage growth slowed and unemployment rose in
Original Article: UK inflation slows to 2.8% as energy price cap softens impact of rising fuel costs — The Guardian