UK inflation slows to 2.8% in April
It is lower than economists’ expectation of 3%
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[LONDON] British consumer price inflation slowed to 2.8 per cent in April from 3.3 per cent in March, official figures published on Wednesday (May 20) showed.
Economists polled by Reuters had mostly expected inflation to soften to 3 per cent, in large part due to the big increases in utility and other regulated prices in April 2025 falling out of the annual comparison.
Before the US-Israel war on Iran began on Feb 28, the Bank of England (BOE) said inflation in Britain – the highest among the Group of Seven economies for much of the last four years – was likely to be close to its 2 per cent target in April.
But the energy-price shock from the war prompted the central bank to increase its inflation forecasts sharply.
It said inflation could hit 6.2 per cent early in 2026 under its most inflationary scenario.
British Finance Minister Rachel Reeves is expected to announce more measures on Thursday to help reduce the cost of living, including a possible cancellation of a fuel-duty increase, which is due to come into effect in September.
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The finance ministry is also pressing supermarket chains to introduce voluntary price caps on key food products in return for easing some regulations, sources said on Tuesday.
The key question for the BOE’s interest-rate setters is whether the expected rise in headline inflation creates longer-term price pressures in the economy.
Several have said the weak jobs market could make it harder for workers to demand higher pay and businesses to pass on higher costs.
The tax office published preliminary data on Tuesday, which showed a sharp fall in people in payrolled employment, and weaker pay growth.
Wage settlement figures published earlier on Wednesday indicated a slowdown in pay growth, too.
Financial markets on Tuesday were betting on two quarter-point interest-rate rises by the BOE in 2026, with a chance of a third.
A Reuters poll of economists published on May 13 showed most expected no change in rates in 2026. REUTERS
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