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UK inflation rate falls AGAIN hitting lowest level in almost three years – what it means for your money
This month's inflation figure is the lowest since 2021 - as the PM said the fall shows 'brighter days are ahead'
THE UK's rate of inflation fell again last month to its lowest level in almost three years, new figures show today.
Consumer Prices Index (CPI) inflation stood at 2.3% in April according to fresh numbers from the Office for National Statistics (ONS).
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This is down from 3.2% in March and marks the lowest level since July 2021.
The data shows inflation is now closer to the Bank of England’s 2% target.
Today's figures confirm that inflation is "back to normal" and ";brighter days are ahead", Rishi Sunak said.
The Prime Minister said: "Today marks a major moment for the economy, with inflation back to normal.
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";This is proof that the plan is working and that the difficult decisions we have taken are paying off.
"Brighter days are ahead, but only if we stick to the plan to improve economic security and opportunity for everyone."
It comes just a day after the International Monetary Fund (IMF) upgraded the UK's growth forecast for the year, predicting the economy will grow faster than that of any other large European country over the next six years.
Inflation is a measure of how much the prices of everyday goods such as food and clothes, and services such as train tickets and haircuts, have increased compared to a year earlier.
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It's important to note that when inflation drops it doesn't mean that prices have stopped rising, it just means they are doing so at a slower pace.
Experts had been predicting a possible drop to 2.1%, so today's announcement is slightly higher.
What is the Bank of England base rate and how does it affect me?
Reacting to the latest inflation figures, a Treasury spokesperson said: "We rightly protected millions of jobs during Covid and paid half of people’s energy bills after Putin’s invasion of Ukraine sent bills skyrocketing – but it wouldn’t be fair to leave future generations to pick up the tab.
"That’s why we must stick to the plan to get debt falling.
"The economy is turning a corner, with strong growth this quarter and inflation close to target, allowing us to cut taxes for the average worker by £900 a year."
Falling inflation offers some hope to mortgage holders and prospective buyers who will be hoping for interest rate cuts.
But pressure is now on the Bank of England to reduce interest rates which are still at a 16-year high of 5.25%.
To do so, it will be looking for signs that services inflation has weakened.
Analysis: Good news for Rishi
By Noa Hoffman, Political Reporter
RISHI Sunak will be beaming from ear to ear this morning with news that inflation has finally plummeted to 2%.
Hitting the target figure was one of the PM’s five key promises to the public, pledges by which he wants voters to judge his time in No10.
At PMQs expect Mr Sunak to say that with inflation under control, his government can start to rebuild the economy and at last boost growth.
With a showdown general election around the corner, he will hint that Chancellor Jeremy Hunt can focus all his efforts on slashing more taxes and forging a path to the elimination of national insurance all together.
Meanwhile, Labour will do all it can to rain on the PM’s parade.
Sir Keir Starmer and Rachel Reeves will warn that hitting 2% doesn’t change the fact that households across Britain are still feeling the cost-of-living pinch – and feeling it hard.
The duo will argue that a mere number doesn’t mean families are finally free from eye-watering prices in supermarkets or that failing public services will now miraculously improve.
PMQs will be a battle between the two major parties on where they can take the economy next with months to go before Brits head to the ballot box.
Mr Sunak will insist there couldn’t be a worse time for families to take a chance on Labour, who have a shoddy record on managing money and business.
Sir Keir will say it was the Tories who got Britain into this dire situation in the first place.
But both will agree – it’s the economy, stupid.
The Bank of England is due to meet again to assess interest rates on June 20.
ONS chief economist Grant Fitzner said: "There was another large fall in annual inflation led by lower electricity and gas prices, due to the reduction in the Ofgem energy price cap.
"Tobacco prices also helped pull down the rate, with no duty changes announced in the budget."
Meanwhile, food price inflation saw further falls over the year, although these were partially offset by a small uptick in petrol prices.
CPI food inflation edged down to 2.9% in April from 4% in March – much lower than its peak of almost 20% in the spring of 2023.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we're earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
What it means for your money
Cooling inflation is good news for household budgets and for those hoping for a summer mortgage rate cut.
Alice Haine, personal finance analyst at Bestinvest, said: "Easing inflation will be welcomed by households across the nation as incomes can now stretch further than they did a year ago, offering some much-needed respite from the barrage of rising bills of recent times.
"Remember, however, prices are still rising, they are just going up at a much slower pace than they were."
The outlook for household finances "certainly appears rosier" after a challenging few years, Ms Haine added.
She said: "Naturally, an interest rate cut sooner rather than later will deliver further cheer to household budgets particularly for those with multiple debts or large mortgages to service, but a slowing inflation rate does not guarantee an imminent interest rate cut.
"Rate setters analyse a range of data including pay growth, something that has remained stubbornly high in recent months despite easing inflation and a loosening labour market, but the mood music is changing with more hints that a summer rate cut is on the cards."
In anticipation of a possible reduction to the Bank of England base rate, experts have urged mortgage holders to think about their options.
Nicholas Mendes, from John Charcol, said: "As your fixed-rate mortgage period nears its end, start reviewing your options at least 3-6 months in advance. Assess your financial situation, check your credit score, and compare current mortgage rates.
"Consulting a mortgage broker can provide valuable guidance tailored to your specific need such as whether to switch to a new fixed rate, opt for a variable rate, or remortgage with a different lender."
Consumers shouldn't see today's news as a signal to splash the cash, however.
"Even if the hoped-for rate cut does materialise next month, borrowing costs remain high, so those with lingering
financial concerns should remain cautious for now," Ms Haine pointed out.
She explained that reining in expenditure, topping up emergency funds, paying down expensive debts and saving and investing for the future are all sensible approaches to ensure households' finances remain resilient in the long term.
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Meanwhile, the UK's rate of unemployment has risen as the number of job vacancies shrinks, according to recent figures.
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