- UK inflation is expected to have eased to 3% in April, according to FactSet consensus estimates.
- The Bank of England could raise interest rates at its next meeting in June to combat inflation.
- UK energy bills are expected to rise when the Ofgem’s energy price cap is reset for July.
UK inflation is set to ease for the first time in 2026 when the Office for National Statistics confirms April’s data on May 20. The Consumer Prices Index is expected to have risen by 3% year over year, down from 3.3% in March, according to FactSet consensus.
Core inflation, which excludes volatile energy and food prices, is set to fall to 2.6% from 3.1%.
Inflation expectations have been rewritten following the onset of the Iran war at the end of February, which has caused energy prices to surge.
Prior to the war, April’s print was expected to fall back to the Bank of England’s 2% target, paving the way for interest rate cuts. However, the UK has been particularly vulnerable to the energy supply shock as a net energy importer.
Despite the downward trajectory anticipated for April, the data should not be taken as a sign that the inflationary impulse from the Iran war is fading, says Victoria Scholar, head of investment at Interactive Investor.
Instead, the likely decline is due to the April energy price cap, which was reset lower prior to the Iran war.
“This will go some way toward helping offset higher petrol, airline and other prices impacted by the elevated global oil price backdrop, with Brent crude trading at around $120 per barrel on average in April,” Scholar says.
“When the Ofgem energy price cap resets in July, UK households will be faced with a sharp increase in energy bills.”
When Are the Next ONS UK Inflation Releases?
- May 20, 2026
- June 17, 2026
- July 22, 2026
- Sept. 16, 2026
- Oct. 21, 2026
- Nov. 18, 2026
- Dec. 16, 2026
Where Next for UK Interest Rates?
The Bank of England’s Monetary Policy Committee does not meet in May, with the next interest rates meeting scheduled for June 18.
Rate-setters will have a further inflation print to digest before then, with May’s dataset to be released on June 17.
Futures markets are currently implying a 32% chance of a hike at the next meeting in June, while the July 30 meeting is seen as the most likely for an increase in interest rates.
As energy prices remain elevated, Raphael Olszyna-Marzys, international economist at J. Safra Sarasin Sustainable Asset Management, says the Bank of England may have to raise interest rates at its next meeting to deal with inflation.
“Policymakers will raise rates only once, in June, to signal their determination to keep inflation expectations anchored,” he says. “We do not expect further tightening after that. By most estimates, interest rates remain restrictive, and second-round effects should be limited, especially if oil prices decline in the second half the year, as we expect.”
