THE UK’s inflation rate has fallen further than expected to 2.8% – but experts warn it’s the “calm before the storm” in the economy with the Pound “vulnerable” and tensions in the Middle East still high.
The Consumer Prices Index (CPI) rose by 2.8% in the 12 months to April 2026, the Office for National Statistics (ONS) has announced.
That’s a 0.5 percentage point fall from the 3.3% recorded in the 12 months to March.
Housing and household services made the largest downward contribution to the monthly change in the CPI annual rates, an upward contribution from a large increase in motor fuel prices was counteracted by downward effects from other categories in the transport division.
Core CPI rose by 2.5% in the 12 months to April 2026, down from 3.1% in the 12 months to March. The CPI goods annual rate rose from 2.1% to 2.4%, while the CPI services annual rate fell from 4.5% to 3.2%.
Grant Fitzner, Chief Economist at ONS, said: “There was a notable fall in annual inflation led by lower electricity and gas prices. This was due to the Government’s energy bill support package reducing variable and fixed tariffs, along with lower global wholesale energy prices before the conflict in the Middle East, which fed through to the reduction in the Ofgem cap.
“Smaller rises in water and sewage bills and Vehicle Excise Duty than seen last year also helped pull the rate down. Food prices, particularly for chocolate and meat products, and the price of package holidays drove inflation down further. These were only partially offset by a further increase in petrol and diesel prices, and an uptick in the cost of clothing and footwear.
“The annual cost of both raw materials and goods leaving factories continued to rise, driven again by higher crude oil and petrol prices.”
It’s the calm before the storm
Experts said it is the “calm before the storm” for the UK economy as the conflict in the Middle East is still not over and oil prices are still high – but they said the Bank of England will now likely hold its base rate.
Anita Wright, Chartered Financial Planner at Ribble Wealth Management, said the Pound is “vulnerable”.
She added: “The drop to 2.8% offers welcome relief but is unlikely to mark a durable turning point. Official CPI understates the true erosion of purchasing power, and that monetary expansion over the past decade leaves the Pound structurally vulnerable regardless of short term prints.
“Commodity and geopolitical dynamics, point to energy and supply chain pressures from the Middle East conflict as inflationary forces still working through the system. Softer inflation usually invites rate cut expectations, which weigh on Sterling. However an oil price shock could quickly reverse the disinflation narrative.”
Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said the economy still feels on the edge.
She added: “The drop in inflation will likely reduce pressure on the Bank of England to raise interest rates again next month, however, we’d be foolish to think the inflation problem has gone away.
“Prices are still rising, just not as quickly as before, and we’ve yet to fully see the impact of higher oil prices and tensions involving Iran feed through into energy and food costs. The economy still feels vulnerable to what happens next in global energy markets.”
Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth, said households will be breathing a sigh of relief.
He added: “This news would have been welcomed before Iran. However, Trump’s tax on us all means this is the calm before the storm when the implications of the conflict in the Middle East will be truly felt.
“The saving grace is that it may give the Bank of England the reassurance to sit on their hands and not make the situation even worse for households and businesses across the country. For that reason it could be time to join Arsenal fans and celebrate.”
It gives the Bank of England a bit of breathing space
Rohit Kohli, Director at Romsey-based The Mortgage Stop, said the Pound could be affected.
He added: “This is mixed news. A fall to 2.8% gives households, markets and the Bank of England a bit of breathing space, especially with core CPI and services inflation also moving lower. It makes a hold at the next Bank of England meeting more likely. But nobody should mistake this for the all-clear.
“The ONS figures show much of the fall came from housing and household services, the full oil and energy shock is yet to come. The Bank has already warned inflation could rise again later this year as energy costs feed through.
“For the Pound, this is not straightforward. Lower inflation can weaken rate expectations, which may weigh on Sterling. But if markets see it as evidence the UK is stabilising, the effect could be more balanced. Right now, this feels like relief rather than recovery. The calm before the storm is probably the right way to describe it.”
Craig Fish, Director at London-based Lodestone Mortgages, said the future is “complicated” for the UK.
He added: “Inflation falling to 2.8% sounds like good news, and it is, but the months ahead are going to be far more complicated. The rises that are incoming are not demand-driven. They are supply-side, tariffs, energy costs, global trade disruption. You cannot fix that kind of inflation by raising interest rates. All you do is choke the economy on top of it.
“The Bank of England knows this, and that is precisely why I expect them to keep cutting, even if inflation ticks back up. But don’t expect anything dramatic. This will be slow, cautious and heavily data-dependent. Every decision will be agonised over.
“Weak GDP, softening wage growth and rising unemployment all point toward further cuts, but the Bank will move at a snail’s pace, one eye always on the global picture.”
