UK inflation slowed more sharply than expected in April, offering the Bank of England some near-term relief as both headline and core price pressures cooled to multi-year lows.
Headline CPI decelerated from 3.3% yoy to 2.8% yoy, below expectations of 3.0% yoy and the lowest level since March 2025. Core CPI, which excludes energy, food, alcohol and tobacco, slowed from 3.1% yoy to 2.5% yoy, undershooting forecasts of 2.7% yoy and marking its lowest reading since July 2021.
The details of the report showed a notable easing in domestic inflation pressures, particularly in the services sector. CPI services inflation fell sharply from 4.5% yoy to 3.2% yoy, a development likely welcomed by policymakers given the BoE’s focus on sticky services prices and wage-driven inflation. Meanwhile, goods inflation edged higher from 2.1% yoy to 2.4% yoy. On a monthly basis, CPI rose 0.7% in April 2026.
Still, the BoE is unlikely to interpret the report as a definitive inflation victory. Much of the downside surprise appears linked to favorable base effects, as this year’s prices were compared against the sharp energy-related increases seen a year earlier. Policymakers are also expected to remain cautious given the recent surge in global oil prices and broader energy costs linked to the Middle East conflict, which could gradually feed back into supply chains and consumer prices in the months ahead.
Even so, today’s data significantly lowers the risk of the BoE delivering another rate hike in the near term and strengthens the case for a patient wait-and-see stance.
| Indicator | Previous | Latest | Expectation |
|---|---|---|---|
| Headline CPI (yoy) | 3.3% | 2.8% | 3.0% |
| Core CPI (yoy) | 3.1% | 2.5% | 2.7% |
| CPI Goods (yoy) | 2.1% | 2.4% | — |
| CPI Services (yoy) | 4.5% | 3.2% | — |
| CPI (mom) | — | 0.7% | 0.9% |
