UK inflation falls to Bank of England’s 2 per cent target for first time since 2021

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Inflation has dropped to 2 per cent in the UK for the first time in almost three years, reveals official data from the Office for National Statistics (ONS). The news offers fresh hope for mortgage holders waiting for an interest rate cut.  

The ONS’s consumer price index (CPI) rate for the year to May indicates that prices are still rising – but at the slowest pace since July 2021.

Food price rises slowed most significantly while the biggest upward contribution came from motor fuels, with prices rising slightly this year but falling a year ago. Clothing and footwear inflation has fallen from 3.7 per cent in April to 3.0 per cent in May.

Kris Hamer, director of insight at the British Retail Consortium, comments: “The country will breathe a sigh of relief as inflation hits the Bank of England’s target of 2 per cent for the first time in almost three years, raising hopes of an interest rate cut for the 9.6 million mortgage holders across the UK. Falling energy prices continue to be the main driver behind the fall in the headline rate however, a lower inflation rate in clothing and furniture also contributed. Food inflation fell the fourteenth month in a row, and those with a sweet tooth will be happy to see that the price of chocolate and confectionary products fell on the month before.

“Hitting the 2 per cent target is welcome news, however, it is vital that inflationary progress is not taken for granted by the next government. Retailers are working hard to limit price increases for their customers, and the next administration must play their part in reducing cost pressures on retailers and the customers they serve. Addressing key costs such as the business rates burden, which leads to customers paying a higher price at the till, must be a priority for whoever forms the next government.”