Inflation slows to 2.8% in UK, strengthening bets on BoE policy pause – Firstpost

UK inflation eased to 2.8 per cent in April, down from 3.3 per cent in March, as energy price dynamics and seasonal base effects helped pull consumer price growth lower than economists had expected, official data showed on Wednesday.

The reading from the Office for National Statistics (ONS) came in below a Reuters poll forecast of 3 per cent, marking a sharper-than-anticipated cooling in price pressures and reinforcing expectations that the Bank of England will hold interest rates at its upcoming policy meeting.

The slowdown was largely driven by lower electricity and gas prices, with regulators attributing the easing to the energy price cap set by Ofgem from April 1, alongside government support measures that reduced both variable and fixed tariffs. A fall in global wholesale energy prices prior to recent geopolitical tensions also fed into the decline.

ONS chief economist Grant Fitzner noted that falling energy costs were the primary driver of the slowdown, adding that smaller increases in water and sewage charges, as well as road tax compared to last year, also helped reduce inflation. Food prices, particularly chocolate and meat products, and package holidays contributed further to the downward pressure on the headline rate.

However, the easing in inflation may prove temporary. Economists warn that higher energy costs linked to the economic fallout of the Iran war could begin to filter through in the coming months, potentially reversing part of April’s disinflation.

Consumer prices are still expected to rise later in the year, with analysts pointing to renewed pressure from global energy markets and imported inflation risks for an energy-dependent economy like the UK.

Recent data showed
UK unemployment rising to 5 per cent in the three months to March, up from 4.9 per cent previously, alongside signs of weaker pay growth and declining payroll employment — trends that could limit domestic inflationary pressure.

Economists now widely expect the Monetary Policy Committee (MPC) to hold rates steady at its June 18 meeting, as it balances the risk of lingering inflation against fragile growth conditions.

Chancellor Rachel Reeves is also expected to announce broader reforms aimed at addressing energy costs and investment bottlenecks, including proposals to give parliament greater oversight over critical energy infrastructure decisions, according to a Reuters report.