British inflation drops below expectations in April

British inflation rose by an annual 2.8% in April, the lowest in more than a year, down from 3.3% in March and below forecasts for 3% increase.

Core CPI, stripped for volatile components, rose by 2.5% in April, compared to 3.1% increase previous month and slightly below 2.6% consensus, while closely watched services inflation was down to 3.2% in April from 4.5% in March and undershooting 3.5% forecast.

On the other hand, Producer Price Index Input jumped to 7.7% in April from 5.3% in March but was partially offset by unchanged PPI Output at 1.4%.

Great Britain had recorded the highest annual inflation rate among the Group of Seven nations for 10 consecutive months until April, when the United States took that position.

Lower CPI numbers in April were helped by smaller increases in household energy and other regulated utility bills than in April 2025, and by measures to lower energy bills introduced by Ministry of Finance, which is expected to announce  further support for households hit by the energy price shock, including a cancellation of a fuel duty increase which is due to come into effect in September.

Economists see lower than expected inflation figures in April more as temporary relief which is unlikely to provide longer lasting positive impact on a darkened outlook for households, as more of negative impact on global costs from the war in the Middle East is still to be seen in coming months.

Economists also expect inflation to rise to around 4% later this year, that adds to the pressure on Prime Minister Starmer who is facing challenges to his leadership after his party lost recent election, as well as on the central bank, which increased its inflation forecasts, signaling that inflation could hit 6.2% early next year in the most negative scenario.