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Inflation falls to 2.8% but is expected to rise from here

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Lower gas and electricity bills were behind a bigger than expected drop in the UK's inflation rate, but inflation is widely expected to rise from here due to the ongoing impact of the Iran war.

The rate of inflation, which measures price rises over time, fell to 2.8% in the year to April, down from 3.3% in the year to March.

Energy prices were lower due to the government's energy bill support package and lower wholesale energy prices before the conflict, the Office for National Statistics (ONS) said.

However analysts expect inflation to rise and reach about 4% by the end of the year, as the Middle East conflict continues to add pressure on global prices.

A lower rate of inflation does not mean prices are falling across the board, but that prices are rising more slowly than previously.

The drop in inflation occurred despite the rise in fuel prices due to the Iran war to highs not seen since 2022.

The average price of petrol rose to 156.8p per litre last month, according to the ONS, while diesel prices rose by more than 30p in April to take the average price to 190p per litre.

Petrol prices have reached a fresh high in May since, according to the RAC, hitting 158.52p a litre on Tuesday.

Yael Selfin, chief economist at KPMG, said the 2.8% rate of inflation was "likely as low as it gets for some time".

"We anticipate that inflation will trend higher through much of 2026, heading towards 4% by the end of the year."

Chancellor Rachel Reeves is set to reveal further cost of living support for households in anticipation of higher energy prices coming down the road due to the conflict in the Middle East.

On Wednesday, Reeves said said decisions taken in the Budget last year had "kept inflation down as we deal with global instability".

"We have already taken £117 off energy bills, frozen rail fares, and lifted the two-child limit, and over today and tomorrow I'll set out the next phase of how we will support UK households," she added.

Shadow Chancellor Mel Stride said: "Any fall in inflation is welcome, but prices are still rising far too fast and Labour have left our economy weak and exposed to the impacts of the Iran war."

Lindsay James, investment strategist at Quilter said the 7% fall in the energy price cap in April was a positive for consumers, but warned it would "short lived".

James noted the large increase in fuel prices underscored "potential threats that still lurk for consumers and businesses", and the UK should brace for higher inflation.

In a sign of what price rises could come down the line, ONS chief economist Grant Fitzner said the annual cost of "both raw materials and goods leaving factories continued to rise" last month due to higher oil and petrol prices.

Producer input prices – the cost of materials and fuel bought by producers to make goods with – rose by 7.7% in the year to April.

Fitzner said lower water and sewage bills and vehicle tax compared to last year also helped reduced overall inflation.

A slower rate of price increases for food – particularly chocolate and meat products – added to the downward pressure on inflation, he added.

Over the 12 months to April, inflation in food and alcohol drinks fell to 3%, down from 3.7% in the year to March.

But the Food and Drink Federation has warned food price inflation could reach 10% by the end of the year.

Ian Cheetham is the managing director of Set Produce, which provides fresh fruit and vegetables to businesses across the country.

With fuel and energy prices rising, he said it was "inevitable that food prices will go up".

"We can absorb some costs going up but with fuel prices as they are and transportation being a big part of the business it can be hard to absorb it all," he said.

The Bank of England's job is to keep inflation at 2%. To do so, it can lift or lower interest rates in a bid to change how households and businesses use their money.

When inflation is above its target, it typically puts rates up. This can encourage people to spend less, which helps reduce demands for goods and services and limits price rises.

However, much of the current inflationary pressures in the economy have come from things outside the UK – higher oil prices due to the war in Iran has led to higher fuel prices – so higher interest rates could have a smaller effect on rising prices.

KPMG's Selfin said she did not expect the Bank to raise interest rates next month, saying its committee will "likely to wait for clearer evidence of a renewed pickup in domestic inflation".

With additional reporting from Hannah Mullane

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Supermarkets hit back over pressure to cap price of milk, bread and eggs

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Government ministers are pressing supermarkets on cutting costs for shoppers but will not force them to cap prices on essentials such as eggs, bread and milk.

Multiple supermarket sources told the BBC that the government had urged them to voluntarily freeze the price of key groceries, in return for an easing of regulations.

On Wednesday, Treasury secretary Dam Tomlinson confirmed talks with the sector had taken place "about the steps that they can take to support people with the cost of living".

He said supermarkets would not be forced to cap prices, but even a voluntary scheme was described by former chairman of Ocado and Conservative peer Lord Rose as the "stuff of nonsense".

The BBC learnt on Tuesday that the Treasury had asked retailers to freeze price rises on certain products in exchange for an easing of packaging policies and a potential delay to rule changes around healthy food.

The proposals, first reported by the Financial Times, come after the Scottish National Party (SNP) pledged to introduce a similar policy in Scotland last month. However, its price cap would not be voluntary.

Tomlinson told BBC Radio 4's Today programme there were no plans to instil a mandatory price cap on food by the government in Westminster.

Pressed on a voluntary agreement to limit prices, Tomlinson highlighted the conflict in Iran and people's concerns over price rises.

"It's right that the government looks across the board at what more we can do – both government levers but also talking to industry about the steps that they can take to support people with the cost of living," he said.

Newly-published inflation figures show the annual rate of food price rises was 3% in April, which was higher than the overall rate of inflation of 2.8%.

Some industry groups have warned the rate of food price rises could hit nearly 10% by the end of the year.

The suggestion of a voluntarily freeze in the price of groceries was met with a furious response by key figures in the industry.

Lord Rose, a former Marks and Spencer chief executive, told the Today programme: "I think the whole idea is the stuff of nonsense and it will never fly."

"This smacks of state control, it's idiotic, it's dangerous and it'll never work."

The Conservative peer said there was "no better system than a free market economy", adding there could be "unintended consequences" of government intervention to limit prices.

The British Retail Consortium (BRC), which represents supermarkets, said the "1970s style price controls" would "force retailers to sell goods at a loss".

Helen Dickinson, the chief executive of the BRC, said: "Rather than introduce 1970s style price controls and trying to force retailers to sell goods at a loss, the government must focus on how it will reduce the public policy costs which are pushing up food prices in the first place."

She added: "The UK has the most affordable grocery prices in Western Europe thanks to the fierce competition between supermarkets," she also said.

One retailer told the BBC: "Ultimately what [the government] should do is stop all the other tax burdens and the prices will come down."

Another said government policies, including rises in the national living wage and employers' national insurance contributions, had increased costs in food supply chains.

Others say price rises are being caused by a surge in fertiliser and animal feed prices since the US-Israel war with Iran effectively blocked their transport through the key Strait of Hormuz waterway.

The groceries price cap row comes as the Chancellor brings forward measures to give the consumer protection watchdog more powers to tackle price gouging.

The Competition and Markets Authority (CMA) will be allowed to "name and shame" firms who have changed their margins in response to an economic shock.

It will also get new, rapid investigatory powers to identify firms taking advantage of crises.

Chancellor Rachel Reeves said on Wednesday: "When global events drive up costs, working families feel it first.

"I will not tolerate anyone exploiting a crisis to make a quick buck off the back of hard working people."

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Arsenal players celebrate title at Emirates at 5am

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Arsenal react to winning the Premier League title

Arsenal players were pictured outside Emirates Stadium at 05:00 BST after they were crowned Premier League champions for the first time in 22 years, as their celebrations continued.

Eberechi Eze posted pictures on Instagram in the early hours of Wednesday, stood outside their stadium in north London alongside team-mates Declan Rice, Bukayo Saka and Jurrien Timber.

Dutch defender Timber posted a video alongside Saka stood by a blacked out Premier League trophy at the club's training ground that was designed to light up once the team won.

"Let me tell you something. Twenty-two years, 22 years. there was laughing, there was joking, they're not laughing anymore. Look, it is going to be shining, it is going to be shining bright."

In another video posted by Saka, 19-year-old defender Myles Lewis-Skelly is seen holding a champagne bottle.

"They called us bottlers," said academy graduate Lewis-Skelly. "And now we're holding the bottle."

Eze's Instagram post also included a picture of an Arsenal-branded bottle in another reference to criticism the team has received for finishing second in the league for three consecutive seasons.

While an Instagram story post showed captain Martin Odegaard with a bottle in his mouth.

Arsenal will hold a trophy parade around Islington on Sunday, 31 May at 14:00 BST, the day after they face holders Paris St-Germain in the Champions League final in Budapest.

On Tuesday night, fans had gathered outside the stadium and nearby pubs while rivals Manchester City played Bournemouth, needing a win to keep the title race alive.

In the end, Pep Guardiola's side could only draw – confirming Arsenal as champions for the first time in 22 years.

As the full-time whistle went on the south coast, there was an explosion of cheer in pubs across north London as Arsenal fans celebrated a moment they felt, after recent title near misses, might never come.

Arsenal legend Ian Wright, who scored 185 times for the club and won the title in 1998, was mobbed by fans as he celebrated outside the Emirates.

There were celebrations also at the Gunners' training ground.

That is where the Arsenal squad had gathered for the evening and, much as in the pubs, the final whistle was greeted by huge celebrations. Players and staff danced and hugged while chanting: "Campeones, Campeones, Ole Ole Ole!"

Last month, Arsenal captain Declan Rice was seen insisting "it's not done" after the Gunners lost to Manchester City. But on Tuesday, with the title race decided, he posted a picture on social media of players celebrating, captioned: "It's done."

The title win came in Mikel Arteta's seventh year in charge, and underlined just what can be achieved if a manager is given time.

"Mikel Arteta's been there a long period of time. The best gift you can give a good manager is time," former Premier League goalkeeper Paul Robinson told BBC Radio 5 Live.

"Yes you can give them hundreds of millions of pounds but you have to mould that money into a team, into a dressing room, a winning side.

"You give a good manager time? There's the proof."

The Arsenal squad celebrated the title win at the club's training ground

Arsenal players celebrated the title win after the draw between Bournemouth and Manchester City confirmed they could no longer be caught

There were scenes of joy and relief as Arsenal players celebrated their title win

Eberechi Eze with fellow Arsenal players outside the Emirates stadium on Wednesday morning

The key moments that decided the Premier League title race

Boats, fire and a TikTok song – inside Arsenal's title win

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When Arsenal went unbeaten to lift the Premier League trophy in 2003-04 – resulting in them being dubbed 'The Invincibles' – they would not have believed it would take them almost a quarter of a century to win the title again.

"I've got married, had a child, who's now a teenager, and got divorced, all since Arsenal last won the league," Gunners fan Matt said on the BBC Sport live text commentary page.

To finally see that long wait ended prompted some fans to mark it in different ways, some more questionable than others.

Gunners supporter Barry wrote: "I've got a can of lager from 2021 commemorating the 1971 double. I said I wasn't drinking it until Arsenal won the league. It's five years out of date, wish me luck."

While other fans are looking to the future, the dream of a double is still on as Arsenal face Paris St-Germain in the Champions League final on 30 May.

"I am confident that we are going to do it," Gunners fan Chloe said on BBC Radio 5 Live.

"PSG are very worthy opponents. But I feel there is that edge and hunger and on our day… I feel that this is our time."

Fans gathered in huge numbers outside the Emirates Stadium to celebrate Arsenal winning the Premier League

Manchester City's draw with Bournemouth sparked scenes of celebration from Arsenal fans

Celebrations took place on the streets and in pubs in north London

Arsenal's win also prompted messages of congratulations on social media.

Prime Minister Sir Keir Starmer, a Gunners fan, posted on X: "22 long years for the Arsenal. But finally, we're back where we belong. Champions!"

Mayor of London Sadiq Khan wrote: "Congratulations to Arsenal – the first London club to win the league in almost a decade and 22 years in the making."

Seven-time Formula 1 world champion Lewis Hamilton shared an image on Instagram of the Arsenal team celebrating the win with the caption: "Come On You Gunners."

While after seeing his side's title hopes ended at Bournemouth, City boss Guardiola added his congratulations to Arsenal.

"On behalf of everyone at Manchester City, we congratulate Mikel and all the staff, players and fans on winning the Premier League.

'It's a great achievement' – MOTD analysis on Arteta's impact at Arsenal

Arsenal fans react to their club's title win

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Empty rooms and Fifa cancellations – US hotels fear World Cup washout

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The World Cup runs from 11 June to 19 July

The World Cup was supposed to provide a tourism boom for the US, but now the fear is it may never materialise.

A report, external produced by the American Hotel & Lodging Association (AHLA) has found that bookings are well below expectations in almost every host city.

The AHLA said this does not align with Fifa's statement that more than five million tickets have been sold,, external and it creates a risk that "the anticipated economic lift may fall short".

The AHLA is the largest hotel association in the US, representing more than 32,000 properties and over 80% of all franchised hotels.

Its report partially puts the blame at the door of Fifa, accusing world football's governing body of block-booking far too many rooms for its own use and creating false demand.

This, the AHLA said, led to artificially high pricing which, after Fifa cancelled a large number of rooms, has been replaced by a vacuum of availability.

Fifa said it does not recognise this accusation.

Hotels said high match ticket pricing, local transport and tax costs, and the political backdrop have put visitors off.

For the hotels, this World Cup could fall flat.

The AHLA said hotels spent years preparing and have made "significant investments" based upon official projections.

A study commissioned by Fifa,, external released last year, predicted that in the US the World Cup could create 185,000 jobs, adding $17.2bn (£12.7bn) in gross domestic product.

The hotels were planning for an influx of international travellers, who book longer stays with a higher spend.

But the AHLA said fewer overseas fans "threatens the broader economic impact" with just over three weeks until the opening game on 11 June.

The AHLA said the large-scale bookings made by Fifa in all cities "shaped revenue forecasts, staffing plans and preparations".

It said this booking policy "manufactured artificial demand" and masked the fact that tourist flow is going to be lower than predicted.

Up to 70% of rooms reserved by Fifa in Boston, Dallas, Los Angeles, Philadelphia and Seattle have been cancelled, the AHLA said.

In a statement Fifa rejected the AHLA's claims and said it had followed agreements made with hotel chains.

"All room releases were conducted in line with contractually agreed timelines with hotel partners – a standard practice for an event of this scale," a Fifa spokesperson said.

"In many cases, room releases were made ahead of established deadlines to further accommodate requests from hotels.

"Throughout the planning process, Fifa's accommodations team maintained consistent discussions with hotel stakeholders, including room block adjustments, agreeing to rates, confirming room types and regular reporting, supported by townhall and ongoing communication."

Prices spiked after the draw was made, as soon as fans knew which cities their teams would be in.

There has been a gradual fall since then, reportedly by a further 20% in recent weeks.

But this could be too late to entice fans back.

Hotel prices in cities like Boston are still more than $300 (£224) a night, and most fans are working to a lower budget.

Chris Hancock, an England fan who has been to four World Cups, told BBC Sport that his group of five are travelling on an accommodation budget of $75 (£56) per person per night.

They will hire a car in each city and book a mix of hotels and Airbnb accommodation between 45 minutes to an hour away.

"We always tend to stay out of town a little bit and cut the cost that way, so we're not in the middle of Dallas, Boston or New York," Hancock said.

"If you're out of the city centres where everything's happening, you can get some cheaper deals.

"We're working within that budget. And at the minute we should be well under that."

The AHLA told BBC Sport it "expects occupancy to strengthen in June and July".

"We know that many fans are still waiting on tickets and schedules to become clearer before finalising plans," a spokesperson said.

"We believe bookings will pick up in the weeks ahead. Hotels are ready to welcome guests and ensure that they have the best possible experience."

Airbnb says the World Cup is on course to be the "biggest hosting event in Airbnb's history", overtaking the 2024 Olympic and Paralympic Games in Paris.

Hotels might need to rely on making gains in the knockout rounds, when fans have to make bookings at short notice.

But the World Cup seems unlikely to bring in the revenue that was being predicted.

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