UK inflation figures for April are expected to have slowed from 3.3 per cent to 3 per cent – but there is a warning that prices are set to keep rising later this year.
The war in Iran and the ensuing Middle East conflict have sent oil prices spiralling since the start of March, resulting in higher energy prices that will, in turn, affect food production, manufacturing, and overhead costs for firms, as well as higher fuel costs.
Rising prices mean a return to rising inflation for the UK, after a four-year battle by the Bank of England (BoE) to bring it under control, after it spiralled due to the Ukraine war.
But when figures are released by the Office for National Statistics next week for April 2026, as well as comparing the month-to-month figure, the headline Consumer Prices Index (CPI) figure will also compare the current picture to April of last year.
Last year, there were notable price hikes across water, electricity, council tax bills and more. This gives a higher starting point of comparison, meaning that the jump to this April’s prices is slightly less, which gives the impression of slowing inflation. Slowing inflation still means prices are rising, just not as quickly as they were a year ago.
But with the aforementioned incoming costs set to impact prices as the year progresses, April’s inflation figures are likely to be little more than a brief dip on a longer rising chart.
The above graph showcases the CPI inflation rate over the past five years, with the spike in April 2025 highlighted.
While current levels are nowhere near the peaks seen in 2022 and 2023, the BoE has been forced to change its prior plan to cut interest rates to freeze them instead in a bid to try to head off the worst of inflation.
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The Food and Drink Federation has predicted that grocery costs could rise as much as nine or even 10 per cent later this year, with much of that hike feeding through in the second half of 2026.
Some supermarket bosses have pledged to keep as much of the extra costs out of eventual prices as possible, but as well as energy bills, fertiliser used for growing food produce is also surging due to the Middle East conflict. And that’s without considering domestic matters such as the rising cost of employment over the past year and other business cost pressures.
Regardless of April’s report showing falling inflation rates, the wider picture is one of the UK back on the upward path.
Deutsche Bank’s chief UK economist Sanjay Raja projects the UK will “see headline CPI tracking at 3.2 per cent year-on-year [for 2026], before dropping to ‘only’ 2.7 per cent year-on-year” in 2027.
Annual inflation for 2025 was 3.4 per cent, and 2.5 per cent the year before. However, the big caveat there remains that the longer the Iran war drags on, the more that increased cost pressures will be fed through over time, prolonging the pain of rising inflation.
With that would come the prospect of interest rate hikes once more, further increasing financial pressures on households with mortgages or other borrowing costs, as well as businesses, which in turn feeds into restrictive pressures for the wider UK economy.
As a result, Barclays analysts Jack Meaning and Cian Hennigan expect housing services and airfares to slow, along with food, alcohol and tobacco prices.
However, durable goods are on the increase, along with communication services and petrol pump prices.
As recently as February, many economists had pinned April 2026 as the month that inflation figures would finally return to the government-set Bank of England target of 2 per cent.
While events of the following months couldn’t have been foreseen, inflation heading in the opposite direction instead is a painful reminder of how the UK has been left reliant on external shocks, which have once again changed the future course of households and businesses.
