Figures released by the Office for National Statistics today showed that inflation has come down – and is now only slightly above the Bank of England’s 2% target.
CPI inflation, which relates to everyday goods like groceries, fuel and clothing, fell to 2.3% in April, down from 3.2% in March. Figures published by the Office for National Statistics showed that inflation is now at its lowest level in three years. This is just slightly above the Bank of England’s inflation target of 2%. Prices are still going up, but more slowly.
Energy prices have contributed to the falling inflation rate. According to BBC News, they fell by 27.1% in the year to April.
Core inflation, which relates to goods and services (excluding food and energy), came down from 4.2% in March to 3.9% in April.
Prime Minister Rishi Sunak described it as a ‘major moment for the economy’ and said that ‘brighter days are ahead’. While this is good news, inflation hasn’t fallen quite as much as economists anticipated.
Slight dip in services inflation
Services inflation, which relates to education and hospitality, only dipped slightly from 6% in March to 5.9% in April.
In October 2022, inflation peaked at its highest level for 40 years at 11.1%.
Many traders have pushed back their predictions of a base rate cut from June to November. However, one spokesperson for the Institute of Economic Affairs thinks a June cut is still possible.
Several politicians have said that the Bank of England should cut the base rate soon, which is currently at a 16-year high of 5.25% and has remained at this level since August 2023.
We will keep you updated on future inflation or base rate changes.