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Inflation eased to 2.8% in the 12 months to April, according to the latest data from the Office for National Statistics (ONS), driven largely by the lower energy price cap.
Core inflation, which strips out more volatile food and energy prices, edged lower to 2.5% in April, down from 3.1% in March, while services inflation fell to 3.2% in April, down from 4.5% in March. Food inflation slowed to 3% in April, down from 3.7% in March.
You can read about some of the ways you might be able to reduce your food costs in our guide 21 ways to save money on your food bills.
Meanwhile, the Retail Prices Index (RPI) measure of inflation, which includes housing costs, fell to 3% in the 12 months to April, down from 4.1% in March.
Kevin Brown, savings specialist and Scottish Friendly, said: “At first glance, April’s surprising inflation reading of 2.8% looks like welcome progress. Yet it should not be taken as a sign that the UK has somehow weathered with resilience the inflationary fallout from the conflict in the Middle East.
“A large reason why inflation eased in April is that the energy price cap was reset lower before the recent surge in oil and gas prices fully fed through to households. When the cap is updated again in July, it is likely to reflect more of the increase in wholesale energy costs that motorists have already experienced at the petrol pumps.
“Today’s figure is unlikely to provide comfort to the Bank of England that inflation pressures are back under control. Another inflation reading is still to come before policymakers next meet in June, which should provide a clearer picture of underlying price pressures ahead of the Bank’s next rate decision.”
What inflation means for you
When inflation slows, this means household living costs are rising more slowly than they were previously, making it easier for those on low incomes to make ends meet. News that it has fallen to 2.8% in the year to April is therefore welcome, although markets expect it to rise sharply over the next few months due to the conflict in the Middle East.
Wage growth continues to outstrip the rate of inflation, although it grew at its slowest rate for five years in the three months to March, with regular pay, excluding bonuses, falling to 3.4%, down from the previous figure of 3.6%.
Mike Ambery, Retirement Savings Director at Standard Life plc, said: “Today’s inflation figure of 2.8% shows some welcome easing, with inflation falling from 3.3% in March. However, with inflation still above the Bank of England’s 2% target, the overall picture remains uncertain and pressures have by no means disappeared.
“While a lower reading offers some immediate reassurance, there are signs inflation could pick up again through the summer. Rising global energy costs, driven by war in the Middle East, are expected to feed through into a higher Ofgem price cap from 1st July – pushing household bills back up and highlighting just how uneven the path back to target could be. At the same time, the recent easing may partly reflect more cautious consumers, who have held back on spending amid uncertainty in recent months.
“With inflationary risks ahead, the Bank of England is likely to take a cautious approach to interest rates. That could mean borrowing costs remain higher for longer, and we’re already seeing some mortgage rates edge up despite the Bank holding rates steady.”
Inflation and your pension
September’s inflation number is usually considered the most important inflation rate of the year for those reliant on the State Pension. That’s because the increase in prices over the year to this point is usually used to calculate the rate at which certain allowances and benefits, including the State Pension, are increased the following April.
Under the ‘triple lock’ guarantee, the State Pension is guaranteed to rise by the highest of September’s inflation figure, earnings growth, or 2.5%. Earnings figures for the three months to July are used for the yearly increase, and given that these stood at 4.8% last year, that means that the State Pension increased by this amount earlier in April 2026, resulting in an annual rise of up to £575 for those receiving the new State Pension. You can find out more about this in our guide What is the pension triple lock?
Inflation holding steady for now is bad news for pensioners who need to make sure their pension lasts throughout their retirement, and the fact that it is likely to rise further in the coming months is worrying for many.
Mr Ambery said: “For those approaching or in retirement, this environment presents a mixed picture. Expectations of higher interest rates have supported more attractive annuity rates, potentially boosting the level of guaranteed income available. However, with prices still unpredictable and the risk that inflation continues to chip away at spending power, having a clear plan for how you’ll turn your savings into a reliable and sustainable income – and reviewing it regularly – is key to staying on track and maintaining financial confidence in retirement.”
Retirees on the lookout for a guaranteed income will find annuities continue to offer good value. The latest data from Hargreaves Lansdown’s annuity search engine shows a 65-year-old with a £100,000 pension can get up to £7,916 per year from a single life level annuity, with a five-year guarantee.
Inflation-linked products are also available – one that rises by 3% per year can give a starting income of up to £5,940 per year at the age of 65 based on the same sized pension pot. As this is considerably lower than a level product, you do need to consider how long it will take the income to catch up to that of a level product.
Helen Morrissey, head of retirement analysis at Hargreaves Lansdown, said, “Income drawdown can play a huge role in helping retirees manage inflation long term. By remaining in the markets, it gives their investments time to grow further, though it’s important to say markets can also be volatile. A flexible approach is important to make sure you aren’t taking too much out and potentially depleting capital. Mixing and matching annuities and drawdown could be a great option. You can secure a level of guaranteed income with an annuity and then keep some flexibility when drawing an income from drawdown. You can then consider annuitising in stages, potentially securing higher incomes as you age.”
You can find out more about annuities in our guide Annuities explained and about drawdown in our article What is pension drawdown and how does it work? If you want to learn more about the impact of inflation on your retirement savings, read our article How does inflation affect my pension?
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If you’re considering seeking professional financial advice on the options available to you, nationwide advice firm HUB Financial Solutions is offering you a free initial consultation with an expert retirement specialist. There’s no obligation; it’s to help you understand your options and how our services work. If you choose to receive paid-for regulated advice, we’ll explain how that works and the fees involved.
HUB Financial Solutions is rated ‘Excellent’ on Trustpilot (Mar 2026). With investing, your capital is at risk.
What does it mean for interest rates and your mortgage?
The Bank of England raised the base rate 14 consecutive times since December 2021 to try to dampen inflation, and made its first base rate reduction for over four years in August 2024, taking the rate from 5.25% to 5%. This was followed by a further quarter-point cut in November 2024 and four more in February, May, August and December 2025, which means the base rate is currently at 3.75%.
The fact that inflation has slowed in the 12 months to April is unlikely to trigger further interest rate cuts this year as living costs are expected to rise in coming months, with some commentators predicting that interest rates could move up rather than down as a result.
Swap rates, which determine fixed-rate mortgage pricing, have been volatile in recent weeks, with many lenders withdrawing and replacing deals after just a few days.
Ben Thompson, Director of Home Moving Strategy, Mortgage Advice Bureau, said: “Whether you’re looking to buy your first home, move up the ladder, or remortgage, a drop in inflation to 2.8% is certainly the news borrowers were hoping for. As inflation begins to ease, we could also see mortgage rates follow suit, helping to relieve some of the ongoing pressure on affordability and consumer confidence.
“Our research shows 41% of prospective buyers are currently waiting for a ‘sign’ before making their next move, highlighting how closely housing sentiment is linked to the wider economic picture.”
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Want to speak to a mortgage adviser? Speaking to an experienced adviser can help you to understand your options and get a great deal on your mortgage.
If you’re looking for expert mortgage advice, you can get a free consultation with a mortgage adviser at HUB Financial Solutions. Speak with a qualified, FCA-regulated adviser you can trust. HUB Financial Solutions is rated ‘Excellent’ on Trustpilot. Please note your home may be repossessed if you don’t keep up with mortgage repayments.
However, even if mortgage rates ease temporarily, borrowers who locked into very low five-year fixed rates in 2021 are likely to face a sharp jump in payments when they come to remortgage, so should start planning for this as soon as possible.
If you’re worried about a potential payment shock when your current mortgage deal ends, read our articles When is the best time to remortgage? and Are you facing a mortgage timebomb?
Impact on savers
If you’re trying to save so that you have a financial buffer in place to cover rising costs, our articles How to build an emergency fund and Best instant access savings accounts may come in handy. Savings rates have risen in recent weeks, so it’s worth checking how much interest your savings are earning and switching to a higher-interest-paying account if one is available.
Caitlyn Eastell, Personal Finance Analyst at Moneyfactscompare.co.uk, said: “While savings rates now sit far higher than in the ultra-low era, and as the top rates are moving in a positive direction, it remains crucial for savers to focus on true value instead of attractive headline rates. The Bank of England’s worst-case scenario projects inflation to reach 5.6% in the second quarter of 2027.
“This runs the risk that even with today’s higher savings rates, returns may still lag if price shocks persist. To avoid the same fate of inflation-battered returns, savers need to take a more proactive approach by reviewing deals frequently, making use of their tax-free cash ISA wrappers and avoiding apathy with long standing accounts that pay below average returns.”
You can learn more about inflation and the impact it has on your finances in our guide What does inflation mean for my money? If you’re looking for ways you might be able to reduce your outgoings, read our articles How to save money – 21 money saving tips and Seven ways to save on your household bills.
Free financial support services
Millions of people are struggling financially at the moment, and although inflation has eased, it remains high, making it difficult for many to manage their outgoings.
If your debts are starting to spiral out of control, contact Citizens Advice to help you find a way forward. You can speak to an advisor through its national phone service Adviceline on 0800 144 8848 if you’re in England, 0800 702 2020 if you’re in Wales, 0800 028 1456 if you’re in Scotland and 0808 223 1133 if you’re in Northern Ireland. Alternatively, contact any of the following specialist debt advice charities:
- National Debtline (telephone 0808 808 4000)
- Debt Advice Foundation (telephone 0800 043 4050)
- StepChange (telephone 0800 138 1111)
Sarah Pennells, consumer finance specialist at Royal London, said: “If you’re worried about rising costs, it’s important to check whether you’re on the best deals for your energy, broadband and insurance. Tracking your daily spending, even for a week or two, can also reveal where small savings can be made.
“Making a budget and prioritising essential payments can help you feel more in control, even as prices continue to rise, but for anyone really struggling, it’s important to ask for help as early as possible.”
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