UK Inflation fell further than expected last month, dropping from 3.3% in March to 2.8% with the main contributing factor being in the form of a reduced energy price cap that took effect from 1st April. Ofgem lowered the energy price cap by 7% across the board to help bring down household bills.
Other previous price pressures for chocolate and meat products and package holidays all saw decreases to help drive inflation lower. There is however some cautiousness in the markets as energy prices are expected to experience a rise in the coming months as the Middle Eastern conflict continues. On top of this, the cost of raw materials still rose last month, with Raw Materials up by 7.7% in the year running to April 2026. A concerning increase from 5.3% in the 12 months up to March, again being influenced by the price hike in Oil.
Usually when inflation cools, it is widely expected that interest rates follow suit. But right now, it still seems that The Bank of England are still looking at the possibility of interest rate hikes later in the year, partly due to the expectation for energy prices to remain higher for longer as the conflict in The Middle East remains in a headlock.
At the turn of the hour, we have Harmonized Inflation figures for Europe which sees all members of the European Union measure the exact same way. The figures are set to come out unchanged, with Core Inflation set to remain at 2.2% in April.
GBP/EUR 1.1533 GBP/USD 1.3370 GBP/AED 4.9114
GBP/AUD 1.8813 GBP/CHF 1.0567 GBP/CAD 1.8412
GBP/NZD 2.2920 EUR/USD 1.1576 GBP/ZAR 22.3059