UK inflation falls to 2.8% as lower energy prices ease pressure

UK inflation fell to 2.8% in the year to April 2026, according to the latest figures from the Office for National Statistics, offering some relief to households and businesses after months of persistent cost pressures.

The Consumer Prices Index (CPI) dropped from 3.3% in March and came in lower than many economists had expected, although inflation remains above the Bank of England’s 2% target.

The fall was driven primarily by lower electricity and gas prices following the introduction of the government’s energy bill support package, alongside reductions in the Ofgem energy price cap.

According to the ONS, housing and household services made the largest downward contribution to inflation during the month, while lower water and sewage bills, vehicle tax, food prices and package holiday costs also helped ease overall price growth.

ONS chief economist Grant Fitzner said the “notable fall” in inflation had been led by lower energy costs.

“This was due to the government’s energy bill support package, along with lower global wholesale energy prices before the conflict in the Middle East, which fed through to the reduction of the Ofgem cap,” he said.

Food prices also continued to soften, particularly for products such as chocolate and meat, while annual increases in services inflation slowed significantly.

Core CPI, which excludes energy, food, alcohol and tobacco, fell to 2.5% in April from 3.1% in March. Meanwhile, CPI services inflation dropped sharply from 4.5% to 3.2%.

Despite the improvement in headline inflation, the ONS noted that price pressures remain in parts of the economy. The annual cost of both raw materials and goods leaving factories continued to rise, driven by higher crude oil and petrol prices.

Monthly CPI inflation rose by 0.7% in April, compared with 1.2% during the same month last year.

The latest figures come against an uncertain economic backdrop, with geopolitical tensions, rising fuel costs and slowing business activity continuing to weigh on confidence across Europe.

Chancellor Rachel Reeves welcomed the fall in inflation, saying the government’s economic approach was helping maintain stability despite global uncertainty.

“We have the right economic plan,” she said. “To change course now would risk our economic stability and leave working people worse off.”

Reeves added that measures introduced in last year’s Budget had helped keep inflation lower while supporting households through global instability.

However, industry leaders warned that businesses continue to face significant challenges despite the easing inflation rate.

Neil Rudge, Chief Banking Officer at Shawbrook, said the figures offered temporary relief but warned that inflationary pressures may not have fully subsided.

“The headline inflation rate fell more than expected in April, offering temporary respite to UK businesses who have grappled with rising prices, stagnant interest rates and geopolitical uncertainty in the past months,” he said.

“Unfortunately, the latest fall is largely due to a planned decrease in household energy bills, with price rises set to resume going forward – potentially peaking above 4%.”

Rudge said businesses would continue to require strong financial support as they navigate an uncertain economic environment.

“While business leaders can’t control the wider economic climate, they still face daily decisions to ensure their companies thrive and remain robust against any further shocks,” he said.

“Access to a reliable lending partner remains crucial. Having the right financing options in place is often the difference between a business that is simply surviving, and one that is positioned to grow.”