Inflation fell back to its lowest level for more than a year last month as a drop in energy prices offset soaring fuel costs, but fears are mounting over a looming cost-of-living squeeze caused by the Iran war.
The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation fell to 2.8% in April, down from 3.3% in March – and the lowest level since March 2025.
The fall was more than expected, with most economists forecasting a drop to 3%.
A big driver of the expected slowdown came from Ofgem lowering its energy price cap from the start of April by 7%, or £10 a month, for the average household using both electricity and gas – which was driven by Government measures to reduce bills.
But inflation is expected to surge back up as the conflict in the Middle East has sent fuel prices soaring, and is set to see the energy price cap increase significantly from July when it it next reviewed.
Chancellor Rachel Reeves is expected to outline a package of cost-of-living support this week in response.
Ms Reeves said: “The war in Iran is not our war but one we will need to respond to, and the decisions I took in the budget last year have kept inflation down as we deal with global instability.
“We have the right economic plan, and to change course now would risk our economic stability and leave working people worse off.
“We have already taken £117 off energy bills, frozen rail fares, and lifted the two-child limit, and over today and tomorrow I’ll set out the next phase of how we will support UK households.”
