The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.0% in the 12 months to April 2026, down from 3.4% in the 12 months to March. This is a significant drop, and it's worth exploring why. Firstly, the OOH component, which accounts for approximately 18% of the CPIH, is the main driver for differences between the CPIH and CPI inflation rates. This makes CPIH our most comprehensive measure of inflation. Secondly, the largest downward contribution to the change in the annual CPIH inflation rate between March and April 2026 came from housing and household services, particularly electricity and gas. This was partially offset by an upward contribution from clothing and footwear. The easing in the 12-month rate between March 2026 and April 2026 reflected a downward effect from electricity, where prices fell by 8.4% in April 2026 compared with a rise of 2.9% a year ago. This was due to changes in standard variable tariffs and the Ofgem energy price cap, which fell in part because global wholesale energy prices reduced in the 12-week assessment period used by Ofgem. The price cap also fell following the UK government's April energy bill announcement, which stated that it would take an average of £150 off the cost of energy bills from April 2026 by making policy changes that would result in lowering the per-unit price. The fall in prices also came partly from changes to fixed tariffs which were affected by the government's energy bill announcement, but not by the Ofgem price cap. The easing in the 12-month rate also reflected a downward effect from gas, where prices fell by 4.4% in April 2026, compared with a rise of 7.5% a year ago. Fixed and variable gas tariffs were affected by the Ofgem price cap and the implementation of the government announcement in a similar way to electricity tariffs. There was a slight counteracting effect resulting from domestic heating oil, where prices increased by 8.5% in April 2026, compared with a fall of 7.7% a year ago. Prices for domestic heating oil are not capped in a similar way to electricity and gas prices. Sewerage collection costs also provided a downward effect, where prices rose by 5.8% in April 2026, compared with a rise of 25.9% a year ago. As the Ofwat announcement also applied to water companies, water supply provided a further downward effect, where prices rose by 9.0% this year, compared with a rise of 26.4% a year ago. There was also a small downward effect from owner occupiers' housing (OOH) costs, which rose by 3.6% in the 12 months to April 2026, the same rate as the 12 months to March. Before this month, the rate had slowed for 14 consecutive months. Monthly OOH costs rose by 0.2% in April 2026, the same rate as a year ago. In terms of other notable movements, recreation and culture prices rose by 0.2% in the month to April 2026, compared with 1.2% a year ago. This led to a 12-month rate of 1.7% in April 2026, down from 2.8% in March. The largest contribution to the downward effect came from package holidays, which are likely to have been affected by the 'Easter effect'. Computer game downloads also provided a large downward effect, with prices falling by 18.1% in April 2026, compared with a rise of 21.1% a year ago. Food and non-alcoholic beverage prices rose by 3.0% in the 12 months to April 2026, down from 3.7% in the 12 months to March. On a monthly basis, food and non-alcoholic beverage prices were little changed in April 2026, but rose by 0.7% a year ago. There were downward effects to the change in the annual rate from 5 of the 11 food and non-alcoholic beverages classes, which were counteracted slightly by upward effects from two classes. Clothing and footwear prices rose by 0.7% in the 12 months to April 2026, compared with a fall of 0.8% in the 12 months to March. Much of the upward effect came from garments for men, women and children, where prices rose by 0.5% in April 2026 compared with a fall of 1.0% a year ago. There was also an upward effect from footwear, where prices rose by 0.4% in April 2026 compared with a fall of 1.8% a year ago. Transport prices rose overall by 4.5% in the 12 months to April 2026, down from 4.7% in the 12 months to March. On a monthly basis, prices rose by 3.6% in April 2026, compared with a rise of 3.8% a year ago. The largest upward effect came from motor fuels, with the average price of petrol rising by 16.6 pence per litre between March and April 2026, compared with a fall of 3.0 pence per litre between March and April 2025. The average price of petrol stood at 156.8 pence per litre in April 2026, the highest price since November 2022. Motor fuel prices are collected across the month, and an average is used in constructing the indices. Diesel prices rose by 31.3 pence per litre in April 2026, compared with a fall of 3.1 pence per litre in April 2025. The average price stood at 190.0 pence per litre in April 2026, the highest price since July 2022. These movements resulted in overall motor fuel prices rising by 23.0% in the 12 months to April 2026, compared with a rise of 4.9% in the 12 months to March. The April figure was the highest annual increase recorded since September 2022. The largest downward effect came from vehicle excise duty (VED), which rose by 3.9% in April 2026. Air fares also provided a downward effect, falling by 3.3% in April 2026, compared with a rise of 27.5% a year ago. In conclusion, the drop in the Consumer Prices Index including owner occupiers' housing costs (CPIH) in April 2026 is a multifaceted issue, with various factors contributing to the downward pressure on prices. These include the impact of the Ofgem energy price cap, the UK government's energy bill announcement, changes to fixed tariffs, and the 'Easter effect' on package holidays and air fares. However, it's important to note that these factors are not the only contributors to the overall inflationary environment, and further analysis is required to fully understand the complex interplay of economic factors at play.
