British inflation eased more than expected in April, although economists warned the relief may prove temporary as rising global energy costs linked to the Iran conflict begin feeding through to households later this year.
Official data showed UK consumer prices increased by 2.8% annually in April, down from 3.3% in March and below economists’ forecasts of 3.0%. The slowdown was driven largely by smaller increases in household energy and utility bills compared with April 2025, alongside government measures introduced by Chancellor Rachel Reeves to help reduce energy costs.
The reading marked the lowest annual inflation rate since March 2025. Following the release, sterling briefly weakened against both the dollar and euro before recovering, while investors reduced expectations for near-term interest rate increases from the Bank of England.
However, analysts cautioned that inflationary pressures are expected to intensify again later in the year. Anna Leach, chief economist at the Institute of Directors, said the impact of the Middle East conflict was already starting to push fuel prices higher at the fastest pace seen since the war in Ukraine.
Many economists now expect UK inflation to climb back toward 4% later this year, increasing pressure on Prime Minister Keir Starmer amid growing political tensions within the Labour Party.
Britain’s inflation figures were also helped by the country’s quarterly household energy price cap mechanism, which reduced regulated bills in April even as global wholesale energy prices continued to rise.
Until April, the UK had recorded the highest annual inflation rate among G7 economies for ten consecutive months, before being overtaken by the United States.