UK inflation – latest: Rates set to return close to 2% target in boost for Bank of England

(PA) (PA Wire)

UK inflation could get near the Bank of England’s target of 2 per cent when the figures are released on Wednesday, experts have forecast.

The Consumer Prices Index (CPI) fell to 3.2 per cent for March, compared with the previous year, and economists polled by Reuters think that inflation could drop to 2.1 per cent.

This would mark the lowest level since July 2021 when inflation was recorded at 2 per cent – the Bank of England’s target level.

Lower gas and electricity prices compared with the prior year are expected to be the key driver behind price rises cooling last month.

Experts said April’s data could be “make or break” for the Bank, which has been waiting for firm evidence that CPI has reached its target level before it can cut interest rates.

UK borrowing costs are currently at a 16-year high of 5.25%, and the Bank’s Monetary Policy Committee is next due to meet in June.

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Welcome

Good evening, and welcome to our inflation blog that will cover analysis and reaction to the figures that are due to be released on Wednesday.

Joe Middleton21 May 2024 19:30

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What is inflation?

The Bank of England (BoE) defines inflation simply as a term used by economists to “describe the increase in prices over time”.

Rising costs of goods and services on the UK high street indicate that the value of the British pound is in decline, which in turn means a reduction in consumers’ purchasing power and therefore their quality of life, as they are discouraged from spending more than they can afford.

This in turn eats into national economic growth.

Joe Middleton21 May 2024 20:30