What drove the fall — what the ONS says

According to the ONS April 2026 release, the largest downward contribution to the change in CPI came from housing and household services, particularly electricity and gas. The 12-month rate for housing and household services was 3.0% in April 2026, down from 4.3% in March. Electricity prices fell 8.4% in April 2026, compared with a rise of 2.9% in the same month a year ago.

The ONS noted this was partly a base effect — reflecting the timing of the Ofgem energy price cap, which had been set using wholesale prices from before the Middle East conflict escalated. Because household energy bills rose notably in April 2025, the comparison with April 2026 produced a significant downward pull on the annual rate. This was partially offset by upward contributions from clothing and footwear, and motor fuel prices.

Services inflation — what the data shows

Services inflation is often viewed by economists as a measure of domestically generated inflationary pressure, as it tends to be more closely linked to wage costs and domestic demand than goods or energy prices. Services CPI fell from 4.5% in March to 3.2% in April 2026 — its lowest level since January 2022.

PwC, in its commentary on the ONS release, noted: "The Bank of England will be trying to pick out the signal from the noise. On the one hand, CPI inflation is still almost three-quarters of a percentage point above where they expected it to be back in February." The Bank of England's own website states as of June 2026: "inflation is now higher than we expected and will probably rise further this year." (Sources: PwC press commentary, May 2026; bankofengland.co.uk.)

Whether the April fall in services CPI represents a sustained trend or a one-month movement is something the MPC will consider alongside further incoming data before the 18 June decision.

Is the April fall durable?

There are published reasons for caution. The downward energy effect that contributed to April's fall reflects a base comparison with April 2025 energy bills — an effect that may not repeat in the same way in subsequent months. The Middle East conflict means global energy prices remain uncertain. The Bank of England's April 2026 Monetary Policy Report projected CPI to be 3.1% in Q2 2026, 3.3% in Q3, and to "rise somewhat further in Q4" as higher energy and food prices pass through.

The OBR's March 2026 Economic and Fiscal Outlook forecast UK CPI to average 2.3% across 2026 as a whole, with inflation expected to reach the 2% target in late 2026. This forecast was finalised before the Middle East conflict escalated, and the OBR acknowledged the situation "could have very significant impacts on the global and UK economies." (Source: OBR Economic and Fiscal Outlook, March 2026.)

What it may mean for wages in real terms

When CPI inflation falls while nominal wages continue to grow, real wages — purchasing power — tend to improve. If a worker's salary rose by 4% over the past year and CPI was 2.8%, the difference represents a real-terms gain. At March's 3.3% CPI, the same pay rise would have left a smaller real gain. The ONS publishes separate data on average weekly earnings and real wage growth.

For those receiving the State Pension, the triple lock means the annual uprating is set to the highest of CPI, earnings growth, or 2.5%. The relevant CPI figure for the April 2027 uprating will be the September 2026 ONS release — which will depend on how the inflation trajectory develops over summer.

What it may mean for savings and mortgage products

Easy access savings rates are influenced by the Bank of England base rate, which remains at 3.75% following the 30 April hold. Fixed-rate savings products provide a return fixed for the agreed term, regardless of future changes to the Bank Rate. Any change to the base rate — up or down — would typically be reflected in easy access savings rates over time, though the extent and timing depends on individual providers.

Fixed-rate mortgages are priced using SONIA swap rates, which reflect market expectations of future interest rates and can move independently of published CPI data. Tracker mortgages move directly with the Bank of England base rate. Standard variable rates are set by lenders at their discretion. Borrowers with specific questions may wish to consult a regulated mortgage broker.

The April CPI data is one of the key releases the MPC will consider ahead of the 18 June decision, alongside the May CPI figures due in mid-June and labour market data. Published expectations on the timing of any base rate change vary — see the related article for a full summary of analyst views.