Inflation has reached the Bank of England’s target for the first time since July 2021, offering potential relief for consumers.
- The Consumer Prices Index (CPI) inflation rose by 2% over the 12 months to May 2024.
- Food prices contributed significantly, increasing by 1.7%, though down from 2.9% in April 2024.
- Clothing and footwear prices saw a decrease, with a 3% rise over the year but a month-on-month fall of 0.6%.
- The British Retail Consortium sees this as a hopeful sign for possible interest rate cuts, beneficial for many mortgage holders.
The annual Consumer Prices Index (CPI) rose by 2% in the year leading up to May 2024, aligning with the Bank of England’s target for the first time since July 2021. This suggests a potential stabilisation in the economic environment, offering a glimmer of hope to consumers and businesses alike.
The Office for National Statistics (ONS) has identified food prices as a key driver of this inflationary change. Although food prices increased by 1.7% over the year, this was a decrease from the previous month’s 2.9% rise, indicating a positive trend in controlling inflation.
Clothing and footwear prices were another area of focus, where a 3% rise was noted in the 12 months to May 2024. However, a 0.6% reduction compared to the previous month suggests some price relief in these sectors.
Kris Hamer, Director of Insight at the British Retail Consortium, commented that UK consumers may “breathe a sigh of relief” as the CPI hits its target, which could increase the prospects of an interest rate cut. Such a cut could potentially ease the financial pressure on the 9.6 million mortgage holders across the UK.
Hamer further highlighted the importance of maintaining progress in inflation control, urging the next government to manage cost pressures effectively. He stated, “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.”
Inflation’s alignment with the Bank of England’s target brings hope for economic relief and stability.
