Inflation returns to 2% target

Residents may be pleased to hear that inflation has finally fallen back to the 2% target for the first time in nearly three years.

The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) inflation decreased to 2% in May from 2.3% in April. This milestone marks a significant turnaround after almost three years of above-target inflation, with the last recorded CPI at 2% dating all the way back to July 2021 before the cost-of-living crisis escalated.

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Despite prices continuing to rise across the country, the rate of increase has slowed down compared to recent years when households and businesses faced significant financial pressures.

As the nation gears up for the General Election on July 4, the latest inflation figures will be closely monitored in anticipation of the Bank of England’s upcoming interest rate decision.

It is widely expected that no rate cuts will be made until after the election as political parties focus on economic pledges in their manifestos.

While the decrease in inflation may be hailed by the ruling Conservatives as a sign of economic success, opposition parties such as Labour and the Liberal Democrats have highlighted that many working people are still struggling financially due to rising prices and high taxes.

Economists warn that although the drop in inflation is a positive development, efforts are still needed to bring down prices throughout the economy.

The Bank of England is particularly attentive to inflation in the services sector, which remains high at 5.7%.

Experts caution that if prices continue to rise at the same rate as seen in May, inflation could surpass the 2% target once again in the near future.

Despite food inflation reaching its lowest level since October 2021, other factors such as increasing petrol prices and air fares continue to contribute to the overall inflation rate.