- In April, UK inflation dropped from 3.2% in March to 2.3%, the lowest figure in almost three years.
- Many economists predict that the bank will lower borrowing prices at its upcoming rate meeting, which is scheduled for June 20.
- The cost of products and services has increased by 15% over the last two years, and food costs have increased by 25% or more.
In April, UK inflation dropped from 3.2% in March to 2.3%, the lowest figure in almost three years. This is the lowest level since July 2021, when the coronavirus outbreak was still hindering the world economy.
As a result of the decline, inflation is getting closer to the Bank of England’s target rate of 2%, which is expected to put pressure on the nine members of the rate-setting panel to lower interest rates from their current 16-year high of 5.25%.
UK inflation
Many economists predict that the bank will lower borrowing prices at its upcoming rate meeting, which is scheduled for June 20. However, if interest rates are lowered too fast, there is a greater chance of inflation rebounding due to persistent worries about the size of price increases in the vital services sector and the rate of wage increases.
Although the recent decline in inflation is encouraging, it does not mean that the worst cost of living crisis in almost 40 years is behind us. Reduced inflation indicates a slower rate of price increases.
How you interpret today’s inflation numbers depends on whether you see the glass as half full or half empty. Consumers are still facing considerably higher prices, according to James Smith, research director at the Resolution Foundation.
After Russia invaded Ukraine in 2022, inflation reached a peak of over 11%, which caused a significant spike in energy prices. The cost of products and services has increased by 15% over the last two years, and food costs have increased by 25% or more.
Because the British economy is once again expanding, the ruling Conservative Party is hoping that reduced interest rates and inflation will create a positive vibe in advance of the January 2025 general election.
