Inflation in the U.K. fell sharply to its lowest level in nearly three years in April on the back of big declines in domestic bills, official figures showed Wednesday. The drop was widely seen as a trigger for Prime Minister Rishi Sunak to call a general election for July 4.
The Office for National Statistics said inflation, as measured by the consumer prices index, fell to 2.3% in the year through April, down from 3.2% in March.
That is the lowest level since July 2021 when the global economy was still being held back by the coronavirus pandemic. The fall also takes inflation nearer to the Bank of England’s target rate of 2% and is likely to pile pressure on its nine-member rate-setting panel to cut interest rates from the current 16-year high of 5.25%.
The upcoming rate meeting on June 20 has led many economists to anticipate a cut in borrowing costs. Yet, some believe that persistent worries among the panelists about significant price increases in the essential services sector and rapid wage growth, which could trigger an inflation surge if interest rates are reduced prematurely, suggest a more probable rate cut in August.
Though the latest fall in inflation is welcome, it didn’t drop as far as some economists had hoped. It also doesn’t mean the cost of living crisis — the worst in around 40 years — is over. Lower inflation, after all, just shows that prices are rising more slowly than they were before.
