The UK inflation rate has reached the Bank of England’s target for the first time since July 2021.
- The annual Consumer Prices Index (CPI) inflation rate increased by 2% over the 12 months to May 2024.
- Food prices contributed to the inflation movement, rising by 1.7% in the past year.
- The CPIH, including housing costs, saw a 2.8% rise over the same period.
- UK consumers remain hopeful for potential interest rate cuts as inflation stabilises.
The United Kingdom’s inflation rate has achieved the Bank of England’s 2% target for the first time since July 2021. The annual rise in the Consumer Prices Index (CPI) inflation rate highlights significant economic movements during the 12 months leading up to May 2024. The most recent data indicates a notable shift in inflation dynamics, offering a glimpse into the country’s economic fluctuations over the past few years.
Food prices played a crucial role in this inflation rate change. Over the 12 months to May 2024, the rise stood at 1.7%, a decrease from 2.9% in April 2024. Meanwhile, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) recorded a 2.8% rise, down from 3% in the previous month. This slower growth in specific sectors marks a pivotal shift towards economic stability.
Clothing and footwear sectors saw their prices hit a CPI rate of 3% in the same period, showcasing a 0.6% month-on-month decrease. The reduction in these categories could indicate easing pressure on certain retail costs and a broader economic benefit for both consumers and producers.
Kris Hamer, British Retail Consortium’s director of insight, expressed optimism, stating that UK consumers can “breathe a sigh of relief” as the inflation hits its target, potentially offering relief to 9.6 million mortgage holders across the nation. Hamer emphasised the importance of maintaining this economic momentum, urging the next government to address ongoing cost pressures effectively.
Hamer highlighted the significance of tackling business rates burdens, which directly impact consumer prices. He underscored that further efforts to manage these economic pressures could result in more predictable retail prices, benefiting consumers throughout the country.
Achieving the inflation target is a crucial economic milestone, suggesting potential stability in the coming months.
