UK inflation in May 2024 | Wilnesh News

Britain’s inflation rate fell to the Bank of England target of 2.0% in May, the Office for National Statistics said on Wednesday, the last report on key economic indicators before July’s national election.

The overall figure was down from 2.3% in April and in line with the 2% forecast of economists polled by Reuters.

Sterling rose slightly shortly after the news, trading at $1.2721 at 7:33 a.m. London time.

Given the dominant role of services in the UK economy and its reflection in rising domestic prices, the Bank of England is closely monitoring services inflation, which was 5.7% in May, compared with 5.9% the previous month.

Core inflation, which excludes energy, food, alcohol and tobacco, fell to 3.5% from 3.9% in April.

The Office for National Statistics said falling food prices were the biggest contributor to price falls, while motor fuel costs continued to put upward pressure.

The latest data from British market research company Kantar showed on Tuesday that unseasonably bad weather caused the growth in grocery sales to fall to the lowest level in two years. The index showed that grocery sales increased 1.0% in the four weeks to June 9, marking the sixteenth consecutive month that food inflation has fallen.

The Bank of England will meet on Thursday to announce its latest interest rate decision and provide an outlook on the future trajectory of inflation. The central bank is widely expected to keep interest rates at 5.25%, Since August 2023 – when inflation was hovering around 7.9%.

Nonetheless, with inflation now close to target, markets are currently pricing in a near-term rate cut. All but two of the 65 Economists surveyed by Reuters Last week said they expected a rate cut in August, while financial markets are pricing in a rate cut in September.

The UK is preparing for a general election on July 4, with polls showing a landslide victory for the opposition Labor Party.