The next CPI (Consumer Price Index) inflation data release is due on 22 April.
And this one is particularly important.
If you’ve been paying attention, you’ll know that UK inflation has “cooled” slightly in the first few months of 2026, having dropped from 3.6% to 3.2% since December.
However, with conflict in the Middle East creating renewed pressures on energy and food prices in the UK, the next CPI report could tell us which direction we’re heading in economically.
If we see inflation rise again, it could lead to further pressures on cost of living, bank savings and the job market.
Let’s unpack the macro drivers at play.
Energy prices are back in focus
The cost of energy is one of the biggest drivers of inflation, and it’s starting to matter again.
Without sugar coating it, conflict in the Middle East has led to an increase in the price of oil and gas. This means:
- Transport costs increase
- Production becomes more expensive
- Household bills rise
What’s important to understand here is that an increase in the price of energy has a ripple effect that steadily drives up the price of everything else downstream. For this reason, there tends to be a lag in the inflation data.
So even if inflation doesn’t spike in April’s CPI release, it’s possible the effects of the energy price increase could show up further down the line.
Food inflation is growing again
Food prices don’t make the headlines in the same way energy prices do, but they are a very visible form of inflation in everyday life.
And there are growing signs that food inflation could soon pick up again:
- Higher energy and transport costs, which drive up the cost of producing and transporting food
- Continued supply chain disruptions, which make distribution less efficient
- Global commodity price volatility, particularly in staples like grains, oils and fertilisers
All of this ultimately leads to increased prices at the grocery store. And this is where inflation starts to feel real, and where consumer confidence is affected.
Monetary policy is tricky right now
The Bank of England is currently facing a dilemma.
On one hand, inflation is still above target. On the other hand, economic growth is weak, and there is increasing pressure to cut interest rates.
Keeping interest rates high may help to slowly ease Inflation, but economic growth will remain sluggish.
However, if interest rates are cut, borrowing becomes cheaper which might stimulate the economy in the short term but it risks elevating inflation further.
This means April’s CPI inflation report could give us a clue as to whether interest rates are likely to be cut in the short term or not.
It’s worth remembering that if interest rates are cut, the savings rates that banks can offer are likely to fall too.
The geopolitical backdrop is chaotic
Ongoing conflicts and geopolitical tensions have already had a major effect on global supply chains, disrupting:
- Energy supply, which has driven up oil and gas prices
- Trade routes, leading to increased shipping times and costs
- Commodity markets, including food and raw materials
None of this is theoretical. We’re already starting to feel the impacts.
When inflation is driven by conflicts and geopolitical tensions, it becomes much harder for countries to get it under control. This type of inflation can’t really be tamed with interest rates because it comes from external shocks that are beyond the control of the government or the Bank of England.
In this kind of environment, the risk is not just that inflation stays elevated, but that it becomes volatile and harder to manage over the long term.
Why owning gold is more important now than ever
TallyMoney customers (and anyone who owns gold) are well positioned to navigate this turbulence.
Why? Because gold is a safe haven asset that has been used to preserve wealth for thousands of years. In plain English, during times of turbulence, fiat currencies tend to weaken while gold holds its value.
And with energy prices rising, food inflation building, monetary policy under pressure, and geopolitical tensions increasing, this is exactly the type of turbulent environment where gold shines.
Recent headlines have talked about how inflation has “cooled” but what they haven’t mentioned is that it is still well above target. And the macro drivers at play suggest strongly that inflation will go up again. Whether or not we see it in April’s CPI inflation report remains to be seen.
Over the long term, inflation is not going away and this means the purchasing power of your savings will continue to diminish – if your savings are in pounds.
If, however, you build your savings in gold, you will be well positioned to ride out the storm and preserve your wealth.
