Inflation drops to 2.8% but Britain braces for fresh cost-of-living pain from Iran war shock
Inflation has slowed to 2.8% in April from 3.3% in March, according to official figures from the Office for National Statistics (ONS) - as economists warn of price rises this summer.
Economists had expected inflation to fall to around 3%, with the ONS figure exceeding forecasts.
The decrease is largely due to increases in utility bills and other regulated prices in April last year no longer being included in the annual comparison.
Ofgem had lowered its energy price cap from the start of April by 7%, or £10 a month, for the average household using both electricity and gas – driven by Government measures to reduce bills.
Before the U.S.-Israeli war in Iran began on February 28, the Bank of England said inflation in Britain - which has been the highest among the G7 economies for much of the last four years - was likely to be close to its 2% target in April.
It comes as reports claim Rachel Reeves’s Treasury asked supermarkets to limit food prices in return for deregulation, while retail firms criticize the Government for policies they say are driving up costs.
However, the energy price shock from the war prompted the BoE to significantly increase its inflation forecasts, suggesting it could reach 6.2% early next year in its most inflationary scenario.
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 made 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 reduced energy bills by £117, 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.”
Conservative shadow chancellor Mel Stride praised the "welcome" fall but added that "prices are still rising far too fast" on X.
"Labour has left our economy weak and exposed to the impacts of the Iran war," he wrote on X.
He added that a "recent spike in borrowing costs" shows the markets are "increasingly worried" about uncertainty - criticizing the prospect of a Labour leadership contest.
"Only the Conservatives have a leader with the backbone and strong team needed to restore confidence and bring debt down through our golden economic rule," he adds.
Meanwhile, Liberal Democrat Treasury spokesperson Daisy Cooper MP said, “Runaway food inflation and an imminent increase in the energy price cap mean that today’s figures will provide little comfort to households and businesses struggling to make ends meet."
Politics Editor
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