Britain's annual inflation rate fell more than expected in April, largely due to a drop in energy prices in the months before the Middle East war, official data showed Wednesday.
Analysts said they expected the rate to shoot back up in the coming months after the US-Iran conflict sent oil and gas prices soaring.
The Consumer Prices Index (CPI) rose by 2.8 percent in the 12 months to April, down from 3.3 percent in March, the Office for National Statistics (ONS) said in a statement.
Analysts' consensus forecast had been for a slowdown to 3.0 percent in April.
"There was a notable fall in annual inflation led by lower electricity and gas prices," ONS chief economist Grant Fitzner said.
"This was due to the government's energy bill support package... along with lower global wholesale energy prices before the conflict in the Middle East," he added.
U.K. finance minister Rachel Reeves is set to deliver fresh cost-of-living support to millions of Britons by reportedly announcing she will cancel her pre-war plans to hike fuel duties.
"Over today and tomorrow I'll set out the next phase of how we will support U.K. households," Reeves said in a statement after the inflation report.
"The war in Iran is not our war but one we will need to respond to," she added.
The planned action also comes after the Labour government suffered heavy losses to the hard-right Reform U.K. and the left-wing Greens in local and regional elections this month.
That triggered a leadership challenge to Prime Minister Keir Starmer, with Wes Streeting resigning as health minister as he bids to oust him.
Ruth Gregory, deputy chief economist at Capital Economics, said the drop in British CPI inflation "feels like the lull before the storm".
"We expect inflation to hover around three percent until July," she said.
Susannah Streeter, chief investment strategist at Wealth Club, said that while "the softer-than-expected inflation reading will come as welcome relief to policymakers and households... concerns remain that higher energy costs and geopolitical tensions could yet feed through".
Worries over a renewed inflation spike, after prices surged following the Covid pandemic and Russia's invasion of Ukraine, are pushing up government bond yields around the world.
The return on the 30-year U.S. Treasury bond reached the highest level since 2007 on Tuesday, while U.K. rates have hit peaks not seen for decades.
Consumer inflation jumped in both the United States and eurozone in April, to 3.8 percent and 3.0 percent year-on-year respectively.
