The UK’s inflation slowdown is proving weaker than hoped, with prices rising 2.8% annually in April—a drop from March’s 3.3% but still well above the Bank of England’s 2% target. The latest figures, released today, underscore the persistent squeeze on household budgets amid stubbornly high services inflation, which remains at 6% year-over-year.
Supermarket shelves and petrol pumps tell the story. While food prices fell 0.6% month-on-month, transport costs—fuel in particular—pushed broader inflation higher. The Treasury’s own projections had penciled in a steeper decline, raising questions about the accuracy of its economic modeling.
| Inflation metric | April 2024 | March 2024 |
|---|---|---|
| CPI inflation | 2.8% | 3.3% |
| Core inflation (ex food/energy) | 3.9% | 3.9% |
| Services inflation | 6.0% | 6.1% |
The Bank of England faces mounting pressure to explain why inflation isn’t cooling as quickly as its forecasts suggested. Governor Andrew Bailey has repeatedly warned that rate cuts won’t arrive until evidence of sustainable progress emerges. “We need to see more than one month of data before drawing conclusions,” a BoE spokesperson said.
Key Points
- ✅ Annual inflation fell to 2.8% in April but remains above the BoE’s 2% target
- ⚡ Core inflation stayed flat at 3.9%, defying expectations
- 💡 Services inflation remains stubbornly high at 6%
Retailers and manufacturers are adjusting strategies. Tesco’s latest earnings call revealed plans to offset higher transport costs by delaying some expansion projects. Meanwhile, the British Chambers of Commerce cut its 2024 UK growth forecast to 0.8%, citing inflation as a primary drag. “Businesses are holding back on investment until they see clearer signs of stability,” said BCC chief economist Suren Thurairajah.
📋 By The Numbers
- £12.4 billion — Additional annual cost burden on households from persistent inflation
- 0.2% — Month-on-month drop in food prices, the first decline since October 2023
The contrast with the US is striking. While UK inflation stagnates, US CPI fell to 3.4% in April, propelling bets on Federal Reserve rate cuts. In the UK, wage growth—while easing slightly to 5.7%—continues to outpace inflation, eroding real earnings growth. “Workers are still seeing nominal pay rises, but the value of those increases is being eroded by higher prices,” said Paul Dales, chief UK economist at Capital Economics.
- Next BoE decision — June 20, when policymakers will announce their latest stance on rates
- June CPI data — Expected to show whether April’s slowdown was a blip or the start of a trend
- Treasury response — Chancellor Jeremy Hunt is under pressure to unveil fresh fiscal measures to curb inflation’s drag on growth
For now, households and businesses brace for another month of uncertainty. Economists warn that without a sharper decline in services inflation—driven by rising rents and wage costs—the Bank of England’s 2% target will remain out of reach.
💡 Pro Tip
Track the BoE’s “services inflation” metric closely—it’s the clearest signal of whether price pressures are easing or tightening. A sustained drop below 5% would be the first green light for rate cuts.