The ONS data shows CPI inflation dropped to 2.8% in April 2026, down from 3.3% in March. At face value, that suggests price pressures are easing.
However, as continued geopolitical unrest in the Middle East and Eastern Europe, it’s widely expected that this figure will see a significant rise when the latest figures come out later this month. The outlook has escalated in the ~6 weeks between real-world events and the corresponding inflation data print. Richard de Meo, Founder and CEO at Attara, shares his insights.
Beneath the Headline Number
The expectation for lagged inflation rises is supported by movements in producer input prices – the costs businesses pay for fuel, raw materials and imported goods – which rose by 7.7% over the same period. This rate dwarfs what consumers are currently seeing at the checkout. That divergence is worth dwelling on, as for many businesses the squeeze is intensifying faster than they can absorb it or pass it along the supply chain.
Add to that the return of energy volatility. The recent dip in inflation has been partly driven by a temporary fall in the energy price cap, but wholesale markets are already moving higher again amid geopolitical instability. Analysts expect energy costs to climb through the summer as supply disruptions linked to the Middle East continue to bite.
The “Geopolitical Tax” on Business
We are seeing what I would describe as a kind of geopolitical tax taking hold. Businesses are not paying more because demand at home is strong, but because global conflict, supply chain disruption and swings in commodity prices are pushing up input costs.
ONS business data highlights this pressure. In April, 40% of trading businesses reported rising input prices, the highest level since December 2022. At the same time, 60% of businesses reported concern about energy costs, and nearly half of firms experiencing supply chain disruption cited conflict in the Middle East as a key driver.
These are not distant macroeconomic trends for smaller businesses. They are immediate operational challenges impacting margins, pricing decisions, and cash flow. For SMEs, the impact is amplified. Larger corporates typically have the scale, infrastructure, and market access to manage and navigate these risks.
Managing Volatility, Not Just Costs
Businesses facing rising costs have to manage the pass-through to customers, however, it’s the unpredictability that presents as much of a challenge as the price rises. Companies cannot simply deploy a defensive pricing strategy to transfer the impact of input cost increases to protect profits. Over-shooting price increases can make pricing look uncompetitive and result in loss of client relationships or market share. Historically, managing that risk has been the domain of large corporates with access to sophisticated hedging tools. SMEs have largely been excluded, not because the need is not there, but because the market has been too complex or inaccessible.
More options are becoming available to smaller enterprises such as the increasing access to commodity hedging, which combine market expertise with technology to make these tools available for smaller businesses. Simple tools enable companies to issue customer pricing with confidence, in the knowledge that they will not suffer the effect of market volatility. By fixing key input costs such as fuel, metals, or agricultural products, it becomes possible to turn uncertainty into something more manageable.
Many end-customers place a premium on certainty. As such, being able to offer fixed prices for longer means that businesses with visibility over their input costs are better positioned to secure longer-term contracts and move faster on growth opportunities. In volatile markets, that consistency can become a differentiator in itself. While others are forced into reactive price changes or cautious planning, those with clearer cost visibility can operate with more confidence and intent.
A Balanced Approach to Risk
Taking steps to fix costs via hedging is a long-standing approach deployed by listed firms and multinational corporates. What we’ve seen change is simply that the barriers to entry are being lowered, enabling smaller firms to participate. Hedging brings price certainty and enables better planning but cannot be universally implemented. The profile of the individual business, consumption patterns and their approach to customer pricing must be considered.
There are also broader steps businesses can take to build resilience. Diversifying suppliers, improving energy efficiency, shortening supply chains, and maintaining strong cash buffers are all critical parts of the equation. The point is managing volatility requires a toolkit, not a single solution.
The Road Ahead
The drop in inflation will be welcomed by households and policymakers alike. But for business leaders, it should not breed complacency.
The underlying pressures, including rising input costs, energy market instability, and geopolitical disruption, have not gone away. If anything, they are becoming more entrenched. For SMEs in particular, the challenge is no longer just surviving high costs. It is navigating uncertainty in a way that protects margin, supports growth, and enables long-term planning.
The businesses that do well in this environment will not be the ones waiting for stability to return. They will be the ones that take a proactive approach to understanding and managing risk.
Richard de Meo
Richard De Meo is founder of Attara, simplifying hedging solutions and giving SMEs the capability to propel their growth and business success. The inspiration behind Attara first came to Richard while working on the FX trading floor at Barclays in 2008, when he noticed his mid-cap market clients weren’t offered the same solutions and services to respond to market volatility as multinationals.
He resigned in 2011 to set up Foenix Partners, an FX specialist business providing currency conversion and risk management services to SMEs.The business became operational and profitable in quick succession. However, Richard decided to return to his initial passion for commodity risk and in 2019, he wrapped operations at Foenix and founded Attara.
