UK inflation fell to 2.8% for the 12 months to April 2026, better than many experts had predicted. The Consumer Prices Index (CPI) figure, reported by the Office for National Statistics (ONS), is a significant reduction from the 3.3% recorded in March.
The drop was larger than anticipated, with financial markets predicting inflation would fall to around 3.0%. It marks the lowest rate of inflation since March 2025, driven largely by a sharp slowdown in housing and household services costs following the introduction of the new energy price cap on 1st April 2026.
There was also a drop in 'core inflation', which fell from 3.1% in March to 2.5% in April. The Bank of England relies heavily on this figure and is considered a strong indicator of its next move because it strips out the fast-changing prices of food and energy.
What caused inflation to drop?
The primary driver of the fall in inflation was a reduction in housing and household services costs, which fell from 5.3% in March to 1.4% in April. This would have been heavily influenced by the new Ofgem energy price cap, which fell by 6.7% on 1st April.
Food prices also contributed to the overall drop in the headline rate. Inflation for food and non-alcoholic beverages eased from 3.7% in March to 3.0% in April, bringing some relief to supermarket shoppers.
Other areas that saw a slowdown in price rises include:
- Health costs - Inflation eased from 3.1% to 2.4%.
- Recreation and culture - Inflation fell from 2.8% to 1.7%.
- Transport costs - Costs rose at a slower pace of 4.5%, compared to 4.7% in the previous month.
Why are some prices still rising?
While the overall inflation rate has fallen, consumers will still feel the pinch in certain areas. Fuel prices remain significantly high for drivers, climbing by 23% over the year to April. This represents the highest annual increase since September 2022. Additionally, clothing prices rebounded, rising 0.7% after a 0.8% decline the previous month. Furniture and household goods also saw a slight price increase of 0.5%.
What are the inflation predictions for the coming months?
Despite April's welcome drop to 2.8%, economists and the Bank of England expect inflation to rise again later this year. The ongoing conflict in the Middle East has caused a significant surge in global oil and wholesale energy prices, and the latest Ofgem energy price cap predictions suggest it could rise from £1,641 to £1,850, a hike of around 13%. Additionally, the jump in global oil prices means motorists are expected to continue facing high petrol and diesel prices at the pump. Economists are predicting that inflation could range from 3.6% to 4% by the end of 2026, and the Bank of England last month predicted it could reach as high as 6.2% if the situation in the Middle East is not resolved.
What will happen to interest rates?
While the larger-than-expected drop in inflation to 2.8% is positive, experts are warning it may only be a brief respite. April's drop in inflation gives the Bank some much-needed "breathing space" meaning it could decide to hold the base rate steady for now. However, if inflation does spike as feared in the coming months, policymakers have warned that further rate increases could still be on the table to help bring prices back under control. If you are interested in learning more about where interest rates might go in the future, check out our article on the latest UK interest rate predictions.
What to do if you are struggling to pay your bills
With food and energy costs predicted to rise sharply, keeping up with household bills is becoming increasingly difficult. If you are finding it hard to cope with the rising cost of living, you do not have to struggle alone.
If you think you might fall behind on a bill, contact your provider as soon as possible. Most suppliers have dedicated teams who can help you set up an affordable payment plan that suits your budget.
You should also make sure you aren't missing out on any vital financial support. A quick check on the entitledto website can tell you if you are eligible to claim any extra benefits.
We also have several dedicated guides that offer further information and support:
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